FICA on profit sharing contribution

[Santo Gold]

I'm not sure how to ask this question, as it was asked of me: With a sole prop entity, is FICA paid on the company's profit sharing contribution? Does FICA reduce the reportable gross income?

Thanks - Mike

[jpod]

Are you talking about FICA tax on the sole proprietor, or the employee(s) of the sole proprietor?

I will assume that the sole proprietor does not operate through a corporation and his/her business income is reported on a Schedule C to the Form 1040. If you are talking about FICA on the sole proprietor, there is none. The sole proprietor pays self-employment tax, which is reported on Schedule SE to the Form 1040. There is no exclusion of the profit sharing contribution FOR THE SOLE PROPRIETOR when computing the self-employment tax (but contributions for the sole proprietor's employees are deducted because you start with Schedule C net income when doing the computation and the contributions for the employees reduces Schedule C net income).

If you are talking about FICA on the employees, employer contributions to the plan for employees are not subject to FICA tax.