I read that self-employed people can write off half of their employment taxes that they paid the year before. Is that true? If yes, on what form do I write this off?
Bill
========================================= MODERATOR'S COMMENT: Deduct 1/2 SE Tax on Form 1040 Line 27.
The moderator's comment is right on.
Also, the tax programs will compute both the self-employment tax and the gross income adjustment for half of it.
To my mild surprise, not every state seems to allow the same deduction for federal SE tax, for example: Arkansas.
-Mark Bole
Also, New Jersey.
Not exactly. You can deduct half of the SELF-employment tax that you pay THIS year, not last year. The last two lines of Schedule SE are your total self-employment tax for this year, and half of that amount. This is on lines 5 and 6 of the Short Schedule SE, or lines 12 and 13 of the Long Schedule SE. The half of this year's self-employment tax from line 6 or line 13 gets entered on Form 1040 line 27.
Bob Sandler
Bob, the OP can deduct 1/2 the SE tax he paid last year (2009) on his income tax return for last year (2009).
You have to take the deduction in the year for which you paid self- employment tax (i.e., if you pay SE tax on your 2008 return, the deduction for one-half of it is also on the 2008 return).
EXCEPT that you write off half of the CURRENT YEAR S/E tax, as an adjustment to income.
Gene E. Utterback, EA, RFC, ABA
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