# $400 rule



## Emerald43 (Oct 21, 2016)

I'm sure that this has been answered somewhere else and I apologize for being too lazy to look for it if it has. (It is a 3 day WEEKEND) 

But what is the significance of the $400 net profit threshold? I think I read somewhere it had something to do with some self employment tax?


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## Older Chauffeur (Oct 16, 2014)

Yes, if you have a net profit of at least $400 you pay FICA taxes (Social Security/Medicare) on all your profit. The rate is 15.3%, the same as on regular jobs, but as shown on your W2, you and your employer each pay half. I think you get credit for half of the self employment FICA on your 1040 when computing your AGI, but I'm not a tax professional, and I too am too lazy to look it up.


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