-1

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.

Improve this question
2
  • 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
    Commented Jun 13, 2020 at 3:20
  • 3
    Why are you paying 26% instead of 14%?
    – prl
    Commented Jul 13, 2020 at 14:51

1 Answer 1

Reset to default
0

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.

Improve this answer
1
  • Thanks @S Spring for your comments. I don't have any company and I work as a Independent contractor.
    – user10930212
    Commented Jun 12, 2020 at 20:41

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .