I'm looking over my Expense Statement, and it looks like self-employed fica taxes ("payroll taxes") aren't included as part of taxes, and therefore not part essential Expenses?
Or am I mistaken? Is that an error?
@jkandell They definitely ARE included but they appear on the Taxes page, not the Expenses page.
Stuart
I will also add that in Pralana Online (unlike PRC Gold) payroll taxes are treated as a reduction to spendable income rather than as an expense. That is because for most people, the employer paystub shows your gross income, deducts payroll taxes, contributions to 401k/HSA, etc. and you only receive as spendable income what is left.
You can see this on the Income Statement, Adjustments to Income section, Payroll Taxes column. This column has a Metric MRI that shows how much is for FICA vs Medicare, by person.
And as Stuart points out, payroll taxes are also show on the Taxes > Summary page.
I will also add that in Pralana Online (unlike PRC Gold) payroll taxes are treated as a reduction to spendable income rather than as an expense. That is because for most people, the employer paystub shows your gross income, deducts payroll taxes, contributions to 401k/HSA, etc. and you only receive as spendable income what is left.
I realize the self-employed tax (SECA) is being "counted" in terms of the overall cash flows; and I see why it might be considered a reduction of spendable income for W2 workers, given it comes out of their paychecks never being seen. But for the self-employed, it is a quarterly separate payment that feels just like income tax.
I guess my larger concern comes from the fact that I take the term "essential expenses" to consist of all of the expenses important to life that I cannot get out of. So the self-employment tax seems akin to income tax, healthcare and housing. And it seems different from "payroll contributions to savings" e.g. my Roth payment that I want to make but at my discretion. I am not necessarily suggesting moving it from the income to the expense screens for self-employed--unless there are enough self-employed users where it would be useful; I can always adjust my downloaded expense spreadsheet.
But something seems off to have such a large non-discretionary tax expense (dwarfing my income taxes) not counted as "Essential". If any other self-employed users could chime in I'd be curious how they view this. It's not a deal breaker overall, since my wife will stop working at some point closer to sooner than later.
I am driving all day today and will give you a better response this evening or tomorrow.
When using one of the Spending Strategies that replaces non-essential expenses, I am quite sure that no payroll taxes would be replaced or changed in any way.
Is your concern about the calculations, or the presentation of data in the tabular projections?
Is your concern about the calculations, or the presentation of data in the tabular projections?
Since you asked: both questions, although I've learned you two are meticulous and I doubt any of the calculations behind the scenes is in error. (Though, since some of the spending strategies exclude or subtract "essential expenses", it would be nice to confirm SE tax is not ignored by some of the spending methods. That is, confirm there aren't situations where user's yearly generated variable spending looks great but it's an illusion since it all goes to SE tax rather than discretionary options.)
However, my concern is mostly about the presentation of the data in the tabular projections. One of my main uses of Pralana is determining my projected Essential Spending for each year of my retirement, including the plethora of big and little taxes. (I use this for liability matching bonds for instance.)
I was asking other self-employed folks to chime in because I may be an outlier. There may be few self-employed users, or there may be plenty of self-employed users but they don't view their SE tax as "essential expense" like I do but closer to reduced income.
