Are Board Of Directors Fees Subject To Self Employment Tax?

Are Board Of Directors Fees Subject To Self Employment Tax?


It's a common question we get here at TaxMama , and the answer is…maybe. It all depends on whether the organization classifies you as an employee or an independent contractor.


If you're an employee, then your board compensation is subject to employment taxes - Social Security, Medicare, and federal unemployment (FUTA). However, if you're an independent contractor, then your fees are subject to self-employment tax.


The self-employment tax is currently 15.3%, which consists of 12.4% for Social Security and 2.9% for Medicare. You're also required to pay state unemployment tax, which varies by state but is generally around 1%.


To avoid any confusion, it's best to consult with an accountant or tax attorney to make sure you're properly classified. Otherwise, you could end up owing a sizable amount in back taxes and penalties.

If you are a board member and receive compensation for your services, you may wonder if the fees are subject to self-employment tax. The answer depends on a few factors, including whether you are considered an employee or independent contractor.


Generally, board of directors fees are not considered wages and are therefore not subject to self-employment tax. However, if you are an employee of the company, your fees may be subject to employment taxes. Additionally, if you provide services to the company as an independent contractor, your fees may be subject to self-employment tax.


To determine whether your board of directors fees are subject to self-employment tax, you will need to consider your status as an employee or independent contractor. If you are an employee, your fees may be subject to employment taxes. If you are an independent contractor, your fees may be subject to self-employment tax.

Just like any other income, board of directors fees are subject to self-employment tax if you are considered a self-employed individual. This means that if you earn $600 or more from serving on a board, you will need to pay self-employment tax on that income.


Self-employment tax is used to fund Social Security and Medicare, and it is calculated based on your net earnings from self-employment. For board of directors fees, this means that your net earnings are your total fees minus any expenses that are considered ordinary and necessary for your role on the board.


If you have questions about whether your board of directors fees are subject to self-employment tax, it's best to speak with an accountant or tax professional. They can help you determine your status and liability for self-employment tax.

The short answer is: it depends. If the organization is a for-profit corporation, then the fees are not subject to self-employment tax. However, if the organization is a non-profit organization, then the fees may be subject to self-employment tax.


There are a few factors that come into play when determining whether or not board of directors fees are subject to self-employment tax. The first is the legal structure of the organization. For-profit corporations are not subject to self-employment tax, while non-profit organizations may be.


Another factor is whether or not the organization is engaged in business activity. If the organization is not engaged in business activity, then the fees are not subject to self-employment tax. However, if the organization is engaged in business activity, then the fees may be subject to self-employment tax.


The last factor is whether or not the fees are paid in exchange for services rendered. If the fees are paid in exchange for services rendered, then they are subject to self-employment tax. However, if the fees are not paid in exchange for services rendered, then they are not subject to self-employment tax.


In conclusion, whether or not board of directors fees are subject to self-employment tax depends on a number of factors. However, the most important factor is the legal structure of the organization. For-profit corporations are not subject to self-employment tax, while non-profit organizations may be.

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