Level 2

Why software (ProSeries) is calculating SE tax and IRS not?

Forum|Forum|2 years ago
February 25, 2024
1 reply
8 views

Escenario:

line 8 433 (self-employed) (IT IS MORE THAN 400)

line 9 48465

line 10 31 (adjustment of self-employment tax)

line 11 48434

line 12 20800

line 13 80 (business income deduction)

line 23 62 (SE tax)

and IRS will send a letter explaining the refund of SE tax, 62 dollars.

My question is if I have to do manually in some part of the software the deduction of the business income from form 8995?

Thanks

This topic has been closed for replies.

T

TaxGuyBill

Level 15

@eliteincometax wrote:

Escenario:

line 8 433 (self-employed) (IT IS MORE THAN 400)

The threshold for SE tax is not $400 of self employed profit. The threshold is $400 of "net earnings from self-employment". That is 92.35% of the profit.

Interestingly, it seems that ProSeries round the numbers but the IRS does not.

The "net earnings" on $433 of profit is $399.88. ProSeries rounds it to $400, which triggers SE tax. But based on what you are saying, it seems like the IRS is not rounding it, so $399.88 is less than the SE tax threshold.

E

eliteincometaxAuthor

Level 2

Thanks so much.

I understand now.

Proseries is rounded to $400. (Schedule SE line 4a).

For me, Proseries is correct because the amounts are always rounded.

I don't know what the IRS is thinking. 😀😂

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