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  1. #1
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    Tax question for you tax guys???

    As a result of the referrals from people on this site, I am doing my taxes online at TaxACT Online and yes I waited till the last minute. When I get done and go to the review tabs I get a few alerts. I got a bonus at the end of the year. For some reason it was not taxed so my Social Security taxes and Medicare taxes don't jive with the 6.2% rate and 1.45% of my gross like it should. He probably should have 1099'd me instead of putting it in my W2. I then had some other expenses for another business I am in which has a self-employment tax.

    Am I assuming right that the self-employment tax takes care of the Social Security and Medicare tax for not only my side business but the shortfall in my W2? My side business is under my name so I just lump it all together on our joint married return. Maybe I just need to make an appointment with a Cyclone Fanatic tax man/woman to make my tax life easier.......thanks for the help.



  2. #2
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    Re: Tax question for you tax guys???

    bumping to see if anyone is reading now who didn't see my question yesterday. Any help is appreciated.



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    Re: Tax question for you tax guys???

    The self employment tax is for self employment and not for compensation received as an employee. Was the bonus reported as part of 2007 wages and compensation on the W-2 you received from your employer? A bonus is normally compensation and usually the withholding on a lump sum payment is usually a standard 30%. Is this reflected on your bonus check pay stub? Have you received compensation in excess of the $97,500? The Social Security Tax of 6.2% of wages is limited to $97,500 of wages and other compensation received from your employer. The 1.45% Medicare tax applies to all wages and compensation received from your employer. Good luck



  4. #4
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    Re: Tax question for you tax guys???

    I got the bonus at the end of the year and there was no withholding from it. He was not going to lump it in the W2 and was going to issue a 1099 but for some reason waited until crunch time and just put it in the W2. So now, when going through the alerts at the end, it states that my social security and medicare is not the right amount and wants me to recheck.

    I also have another source of income that is independent of my job and it shows up as a 1099 so I know I have some self employment tax. I just want to make sure the tax number I have is for the 1099 as well as the shortfall as a result of the shortage from the bonus. Don't want to give any reasons for a potential audit.



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    Re: Tax question for you tax guys???

    I don't know what to tell you as far as the tax software you are using. A bonus received from employment as an employee is reportable on Form W-2 and is subject to withholding like any other wages and compensation. I can't answer why your employer did not withhold the appropriate FICA or income taxes. If you received a bonus as a non-employee then a 1099 Misc should have been issued. If you include the bonus as self employment income you will have to pay both the employer share of FICA tax due as well as the employee share of FICA tax due. If your taxable wages exceeded the $97,500 you do not owe the 6.2% Social Security Tax on the excess but you do owe the 1.45% Medicare Tax no matter what your total income is. The self employment FICA is 12.4% of Social Security and 2.90% for Medicare Tax. I have a feeling that you can't use the tax software to file electronically because of the failure of your employer to withhold the proper amounts of tax but that is just my guess. I am sorry I can't help you further.



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    Re: Tax question for you tax guys???

    I would suggest you consult a CPA or at the very least a trained tax preparer.



  7. #7
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    Re: Tax question for you tax guys???

    Quote Originally Posted by 83Clone View Post
    I would suggest you consult a CPA or at the very least a trained tax preparer.
    Ya, I am quickly coming to that conclusion. Thanks jercarl for replying to my question.



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    Re: Tax question for you tax guys???

    I agree. If it was on your W-2, there should have been withholding.
    I am assuming you work for a "small firm"? Not repeating what others have told you about the FICA and Medicare withholding limits, it appears your employer has made an error.



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    Re: Tax question for you tax guys???

    If it makes you feel better, you are not even close to last minute, that is October 15th when you can get no more extensions!

    Your employer screwed up by putting something on the w-2 that he did not withhold SS taxes. When he files his Form 941 and it does not match up they are going to eventually make him pay the SS taxes.

    I hate to make you spend money, but I agree with those above, you should not be doing this by yourself.

    Good luck. Your employer did you no favors by not witholding taxes for you.



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    Re: Tax question for you tax guys???

    Quote Originally Posted by SLCyclone View Post
    ... it appears your employer has made an error.
    That's more common than you might think.



  11. #11
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    Re: Tax question for you tax guys???

    I brought it to his attention when I seen something didn't look quite right and there wasn't a 1099 with the W2 but he said he just did it that way to save some time. I didn't realize the hassles that would create so I will be a lot more proactive on how it is handled this year. Now I just want it done and over with....whoa is me.



  12. #12
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    Re: Tax question for you tax guys???

    I think you have two questions hear that needs addressing:
    1. Your employer screwed up and made an incorrect w-2. So it is HIS problem to correct. He must put the correct social secutity and medeicare withhoding on the w-2. That means he must do a corrected copy and pay the withholding ,at least his share, and you may have to pay your share since he didn't withhod your share.

    2. It sounds like you also have a side business and will need to file a schedule C to show the 1099 income. From that amount you can claim your expenses, such as mileage or any over expenses you incurred in earning that income.
    I too would suggest that you see a cpa or tax professional for clarification as to your responsibilities and to help you come up with any expenses to your schedule C.

    GOOD luck!!



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