How do I calculate Income and SE Tax?

Question

I have sole-proprietorship. After expenses my taxable income is $1275.90. My question is do I take 15% off that number for Income tax THAN out of that number after Income tax I subtract additional 15% for SE Tax or do I have to use $1275.90 as a starting point for both taxes??

Thank you for your reply's.

Answer 1

Your schedule C shows net $1275.90

Your schedule SE shows tax of $180.

Your 1040 adds the $1276 and subtracts $90 (you get a give-back of 1/2 of the SE tax).

Net income is an added $1186.

Answer 2

First of all - if you have a sole proprietorship, you are filing something called a Schedule C.  Your Schedule C will reflect "gross income" minus "expenses", resulting in a "net  profit".  

If the $1276 is the number on the "net profit" line - that applies to the business only.

If this amount is truly the only income you have, you will be credited back the "one-half self-employment tax", which in your case will be $90.  This means your adjusted gross income is $1186 ($1276 - $90).  Assuming you are single and childless, applying your standard deduction and personal exemption credit will bring your taxable income to "0".

Adding your self-employment tax ($180) back, means that $180 is what you will owe.