As previously discussed, a self-employment tax is imposed upon taxpayers the IRS deems “self-employed.” This often includes small business owners, entrepreneurs, and independent contractors. The good news, however, is that half of one’s self-employment tax is deductible!
Claiming the self-employment tax deduction is rather simple; a taxpayer need only reference the Schedule SE he/she completed while calculating Line 56’s self-employment tax liability. More specifically, the taxpayer must transfer the value computed on either Line 6 (Short Schedule) or Line 13 (Long Schedule) of Schedule SE to Line 27 of Form 1040 to report the proper deduction amount.
While many people may view the self-employment tax as a discouragement to entrepreneurship, this 50% deduction of self-employment tax payments serves as a pleasant concession by the IRS.
Photo by: Gail Frederick