Originally Posted by Blackeyes24
How do I calculate the tax consequences for his portion of the earnings? He has agreed to pay me for this but I want to make sure I do the calculations myself so he cant screw me over any further.
assume that, your net,NOT GROSS as I have no any info on your biz operating expenses, self employer’s income is 8290.05;$3436.02+$4854.03.however, you need to calculate the seca tax only on $3,436.02 that was earned in your name but it actuaaly belongs to your buddy. I assume that you file sch c /sch se to report your self employer income of $3,436.02.to calculate your tax liability on $3,436.02, you need to follow form Sch SE instruction. For example, assume that your net earnings reported on Sch C ine 29/31 or Sch SE line 2 is $3,436.02, then,your SECA tax liability on $3436.002 is $485.50 reported on Sch SE line 5and howver, you can deduct 50% of $485.50,$242.75 on $485.50 , SECA tax on $3,436.02. So you need to pay $242.75.$242.75 is the amount that you ned to receive it from your friend since this is the SECA tax yu pay on $3,436.02
Note;I am not sure if you need to pay quarterly estimated taxes on $3,436.02. as you know, if the estimated taxes > your tax liability on Sch C , then, you are subject to a tax refund; a tax refund or tax rebate is a refund on taxes when the tax liability is less than the taxes paid. Taxpayers can often get a tax refund on their income tax if the tax they owe is less than the sum of the total amount of the withholding taxes and estimated taxes that they paid, plus the refundable tax credits that they claim. still you need to receive $242.75 from yourfirend.