Are you an owner-employee of a partnership or limited liability company (LLC)? In general, business income that flows through to you for income tax purposes is subject to self-employment taxes. This is true even if the income isn’t distributed to you. But such income may not be subject to self-employment taxes if you’re a limited partner or an LLC member whose ownership is equivalent to a limited partner’s. The additional 0.9% Medicare tax may also apply if wages and self-employment income exceed $200,000 ($250,000 for married joint filers, $125,000 for separate filers). We can review the specifics of your situation, determine your tax exposure and recommend ways to reduce tax liability.
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