Question: How Does Self-employment Tax Work for a Qualified Joint Venture?
A qualified joint venture is a husband-wife business that files taxes using two Schedule C forms instead of as a partnership. Self-employment taxes are the Social Security and Medicare taxes paid by business owners; the owners receive social security and Medicare credit for paying these taxes. Here's how self-employment taxes work for qualified joint ventures:
Answer:
Because both the husband and wife file a Schedule C, both pay self-employment tax (Social Security and Medicare) on your portion of the business profits. Both spouses must both file Schedule SE to calculate the amount of this tax owed. So, both spouses have social security and Medicare credits toward retirement. While both pay all of the tax (a total of 15.2%), each receives a credit of one-half the tax on the personal tax return.
As an example, if the business profits are $100,000, and both spouses share equally in these profits, each would pay self-employment tax on, and receive credit for, $50,000 in income toward Social Security and Medicare.
More about the qualified joint venture.
