Thanks for looking into my post.

I am an independent contractor and I don't have any LLC or company.

Currently, I am paying 26% on the self employment tax even after contributing to SEP IRA.

Is there any way that I can reduce the self employment tax?

Please share your thought on this one.

  • 4
    The only way I know of is to look at everything you could possibly deduct as a legitimate business expense. Otherwise, earn less money :-) – jamesqf Jun 13 '20 at 3:20
  • 3
    Why are you paying 26% instead of 14%? – prl Jul 13 '20 at 14:51

An LLC can elect to be taxed as a corporation but a corporate dividend represents double taxation of dividends. So most likely only a regular salary would be taken out of a corporation.

A salary still owes income tax and Social Security tax but the salary is not a complete pass-through of company profit. Much of the profit of the corporation will build-up in the value of the corporation.

Now if the corporation receives dividends then up to half of those dividends don't face double taxation when the corporation passes its own dividends.

  • Thanks @S Spring for your comments. I don't have any company and I work as a Independent contractor. – user10930212 Jun 12 '20 at 20:41

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