With the primary form 1040, for salaries/wages, things are explained fairly straight forward: you deduct a Personal Exemption, and you deduct EITHER a Standard Deduction OR an Itemized Deduction of expenses.
But with self-employment tax, I can't find information about how business expenses interact with the 50% self-employment deduction.
Question: can you subtract business expenses on Schedule C-EZ (less than $5,000) to reduce Net Profit AND then take the 50% self-employment deduction on Schedule SE as well? Or are they mutually exclusive?
In simpler terms, is this list of operations correct for self-employment?
- Calculate Net Profit by subtracting expenses.
- Multiply the Net Profit by ~92% to get the Self-Employment Taxable Income.
- Multiply the Self-Employment Tax by 50% to get the Deductible Part of SE Tax?