If an individual is an employee and also has self-employment income,the maximum tax base for computing self-employment tax is reduced by the wages that are subject to the FICA tax.

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Quizplus · Accepted Answer

This is true. The self-employment tax is calculated based on a percentage of the individual's self-employment income up to a certain maximum limit. However, if the individual also has wages that are subject to FICA tax (i.e. Social Security and Medicare), the maximum tax base for self-employment tax is reduced by the amount of those wages. This is to prevent double taxation on the same income.

If an Individual Is an Employee and Also Has Self-Employment