different tax treatment between employment income and business income.?

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  • different tax treatment between employment income and business income.?


Answer #1 | 03/08 2011 19:26
This question somehow appeared in my US tax group. My answer applies to US. If you asked about Malaysia, I have no knowledge, sorry. Here're 3 points as a start. 1. Social Security/Medicare tax, aka self-employment tax. Employment: 1/2 paid by employee, the other 1/2 by employer Business: business owner pays 100% 2. Business expenses Employment: business expenses are usually paid by employer and not deductible to employee Business: business expenses fully deductible against business income 3. Tax withholding Employment: taxes pre-paid by withholding from each paycheck Business: taxes are not withheld; must be paid via quarterly "estimated payments" Michael Plaks, EA, Houston TX
Positive: 32 %

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