Small Business Tax Calculator

Net Profit from business

The amount of money a business has left after subtracting all its expenses from its total income.

Self-employment Tax

A tax that self-employed individuals must pay to fund Social Security and Medicare. If net profit is greater than $400, this tax applies to net profit from self-employment. The self-employment tax rate is 15.3%, which is 12.4% for Social Security plus 2.9% for Medicare.

Qualified Business Income Deduction

The Qualified Business Income (QBI) deduction allows small business owners to deduct up to 20% of their qualified business income.

Self-employment Tax Adjustment

You can deduct half of your self-employment tax as an adjustment (i.e., above the line deduction).

Net Profit after SEHI

This amount is not entered on the tax return, but when compared to Net Profit, you can see the effect of the Self-employed Health Insurance adjustment.

Self-employed Health Insurance Adjustment

The self-employed health insurance adjustment allows self-employed individuals to deduct up to 100% of their health insurance premiums from their taxable income, which can lower their adjusted gross income. To qualify, you must be self-employed, have a profitable business, and not have access to employer-sponsored health coverage during the months you claim the deduction.

Medical Insurance Itemized Deduction

The Self-employed Health Insurance adjustment limits the amount of medical insurance premiums that can be used to less the net profit of the business. Any amount of medical insurance premiums in excess ogf that can be used as an itemized medical deduction on schedule A.

Sales or Receipts

Gross receipts from the business. Self-employment income is frequently reported on 1099-NEC.

Returns and Allowances

Returns are cash or credit refunds given to customers who return products. Allowances are reductions in the selling price in lieu of a refund.

Cost of Goods Sold

The cost to acquire or produce items sold during the tax year.

Other Income

Business income not reported elsewhere.

Business Use of Home Expenses

You may be able to deduct expenses for using part of your home regularly and exclusively for your business.

Gross Income

This is the income from the business before subtracting expenses.

Advertising

The amount spent to promote the products or services of the business.

Car and Truck

The actual expense of operating a car or truck for the business.

Car and Truck Miles

The number of business miles driven with a car or truck. This field is ignored if there is an amount entered in the Car and Truck field; otherwise, the mileage is multiplied by the standard business mileage rate and the result is car and truck expense amount.

Commissions and Fees

All commissions and fees paid during the tax year.

Contract Labor

Total cost paid to persons you do not consider employees.

Depletion

A deduction to allow businesses to account for the reduction in value of natural resources as they are extracted.

Depreciation

A deduction that allow businesses to recover the cost of certain assets over time, reflecting their gradual decline in value due to wear and tear. Depreciation allows a business to recover the cost of an asset that has a useful life beyond the current tax year.

Employee Benefit Programs

Contributions to an employee benefit program that are not part of a retirement plan (for example, health insurance or dependent care assistance).

Insurance

Premiums paid for business insurance.

Interest

Deductible business interest.

Legal and Professional Services

Fees charged for services that necessary and directly related to the business.

Medical Insurance

Premiums for medical (including medicare) and dental insurance, and long-term care insurance. Any amount included for long tern care premiums must be limited based on age. Include insurance for the taxpayer, spouse, and any dependents. This deduction is limited by the net profit of the business, but any excess premiums can be used as an itemized deduction on schedule A.

Office Expenses

Expenses for office supplies and postage.

Pension and Profit Sharing Plans

Amount of contributions to retirement plans made for the benefit of employees, including pension, profit-sharing, annuity, SEP, SIMPLE, and SARSEP plans.

Rent or Lease

The business portion of any rent or lease costs. This may be for vehicles, machinery, equipment, or office space.

Repairs and Maintenance

Cost of incidental repairs and maintenance that do not add to the value of the item.

Supplies

The cost of materials and supplies that were consumed during the tax year, including incidental items for which there are no inventories or records.

Taxes and Licenses

Include state and local taxes, real estate and property taxes, licenses and regulatory fees.

Travel and Meals

Lodging and transportation expenses for overnight business travel. Include deductible meal expenses.

Utilities

Include utility expenses, such as electricity and phone.

Wages

All wages and salaries.

Other Expenses

This is a catch all field for expenses not covered in one of the other fields.

Total Expenses

This is the sum of the above expenses, except medical insurance. Medical insurance is used to calculate the Self-employed Health Insurance adjustment.