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Subject:  Re: Self employment tax Date:  6/23/2006  2:19 PM
Author:  2gifts Number:  87538 of 127616

If it should be a W-2, the OP would be an employee. FICA taxes would be due on the gross pay, and the expenses she incurs may not provide a tax benefit.

If she's not an employee, the FICA taxes are going to be less. At a minimum, the expenses will reduce the FICA taxable income. And if it's a hobby, no FICA taxes are due at all.

Perhaps I am not remembering correctly, but it would seem to me that FICA taxes would be much more if she's not an employee. If she's an employee, then she pays half the FICA, and the employer, the BIL in this case, pays the other half of FICA. But if she's self-employed, she pays both the employee and employer portion. It seems to me that it's something like 7.5% for each half, so it's that extra 7.5% she'd be paying if she's self-employed. I can't imagine the business expenses she may incur would be higher than that, but you never know.

Do I have it backwards?
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