# Is the 15% se tax after personal and/or milage deduction?



## OldBay (Apr 1, 2019)

Just wondering... 

The milage deduction makes most of the earnings deductible, which will lower your taxable income quite a bit.

Then there is the personal minimum. If you are below this, then you don't have to pay taxes.

Lets say you earn 20K, of which 75% is deductible from milage deduction... so you still are responsible for taxes on 5K. Since this falls below threshold for personal tax, do you still need to pay the 15% se tax?


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## beezlewaxin (Feb 10, 2015)

I am not a tax pro at all but I usually do my taxes manually so I have read the IRS instructions on all the tax forms and I believe that yes you would still need to pay 15% se tax on $5000 in your example. You would not need to pay any income tax on it because it is below the income tax threshhold.

Drivers that have no w2 income should be careful about reducing their se tax to zero through se deductions. It may come back to bite them when it comes time to calculate and collect social security upon reaching retirement age.


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## touberornottouber (Aug 12, 2016)

After. You deduct the standard miles on your 1040 Schedule C. At the end of it with what is remaining you get your "net profit or loss from business". This number then goes on your 1040 and 1040 SE (I may have this last schedule name wrong) where your Self Employment tax is figured.

As a result many drivers will owe $0 in self employment taxes.


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## Matt Uterak (Jul 28, 2015)

Another note on social security. 

Retirement requires 40 quarters. 

Disability requires one to be currently insured. 20/40 quarters. Or 5 years of work in the last 10. 

To get all 4 quarters in a year one must have $5440 ($1360 per) in income taxable for social security. 

Your disability or retirement benefit is still calculated on total earnings. Your benefit will be quite small if your taxable is $5,500 a year.


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## kc2018 (Dec 14, 2017)

OldBay said:


> Just wondering...
> 
> The milage deduction makes most of the earnings deductible, which will lower your taxable income quite a bit.
> 
> ...


You do a Schedule C which figures out your NET earnings from RS. THAT is the number that is used to calculate SE tax. YOU HAVE TO GET THAT NUMBER AS LOW AS POSSIBLE. Unlike the person said above, I have never gotten that number low enough to pay zero in SE tax and I even claim a home office expense.

The personal standard deduction is outside of the SE calculations. It does not help you escape SE tax. SE TAX is figured before you take out that money and it is based directly on the Schedule C. Take a look at the Schedule C to make sure you are getting everything you can on there.

https://www.irs.gov/pub/irs-pdf/f1040sc.pdf
I am a tax nerd who does them by hand every year (no Turbotax).


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## touberornottouber (Aug 12, 2016)

kc2018 said:


> https://www.irs.gov/pub/irs-pdf/f1040sc.pdf


Read the instructions for #31 on this form. Before putting this number on your 1040 and 1040 SE, you have already taken the standard mileage deduction. The purpose of the Schedule C is to find your net profit (or loss) from a business activity. You take the standard mileage deduction here in your schedule C on line #9.

If your number from 1040 Schedule C line #31 is either $0 or negative then you end up not owing any Self Employment taxes because according to the IRS you made $0 from that business activity.


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