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GT-Shooter
Level 1

Self-Employed Tax Profile W2 Federal Tax Calculation

I held a W2 position in 2020, paid both federal and FICA through May. Started my own LLC and have generated income. I am setting up my Tax Profile in Quickbooks Self-Employed and would like to know in the Your Federal Withholding box do I only list Federal Income Tax paid or do I also add Social Security and Medicare Tax. The numbers are certainly different and give a different estimate for the quarterly payment owed. Since, as an LLC, I am responsible for the full FICA it made sense to me to add the FICA from my W2 together with the Federal Taxes paid to get a more accurate estimate. Any suggestion greatly appreciated.

3 Comments 3
MichelleBh
Moderator

Self-Employed Tax Profile W2 Federal Tax Calculation

Hi there, @GT-Shooter.

 

Let me provide some information about setting up Tax Profile in QuickBooks Sel-Employed (QBSE). 

 

Since you're self-employed, you'll apparently want to spend federal self-employment tax. Includes income, Social Security, and Medicare taxes for your self-employed work. With this, I'd highly suggest consulting an Accountant for further guidance to make sure your self-employment taxes are correct. 

 

For more details, visit this article: Review your tax profile in QuickBooks Self-Employed.

 

QuickBooks used the current profits to estimate your income for the rest of the year. Since you held a W-2, QuickBooks adjusts already the taxed household income and supply standard deductions. The calculation is by adding your income, then subtracts expenses and deductions you can write off. The result with that amount is your business profit. That's the reason why it shows different estimates for the quarterly payment owed. 

 

For more information, check out this article: How QuickBooks Self-Employed tracks self-employment taxes.

 

Please visit our help articles. This page contains a lot of topics about managing your estimated tax, forms, reports, and other related topics. 

 

Let me know if you have follow-up questions. I'm always here on your back ready to help. 

GT-Shooter
Level 1

Self-Employed Tax Profile W2 Federal Tax Calculation

Thanks for the response. I did see the standard deduction calculation that was supplied by Quickbooks based upon the amount I made for 2020 under my W2. The problem with the provided standard deduction in Quickbooks is that it is way less than I actually paid (i.e. quickbooks calculates $13.5K and I actually paid in $20.2K). My question was about adding FICA. If I do it goes from $20.2K to $28.9K. 

 

Hope this helps. Appreciate it. BTW, numbers shown are for discussion purposes only of course and do not represent actuals.

FritzF
Moderator

Self-Employed Tax Profile W2 Federal Tax Calculation

Thanks for getting back to us, @GT-Shooter.

 

Since manually adding FICA in QuickBooks Self-Employed (QBSE) makes the amount way higher, I highly suggest consulting your accountant or tax professionals. They can provide more expert advice about how you can handle your FICA from your W2 to make sure your books are accurate. 

 

To learn more about managing taxes in QBSE, consider checking out these articles:

 

 

If you have any other questions or concerns, please don't forget to leave a comment in this thread. I'll be more than happy to help. Have an amazing rest of the day!

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