How is the income for a law firm partner taxed? Self-employment tax questions

You're close but not quite right about how law firm partners are taxed. Let me break it down: 1. Yes, partners pay regular income tax on their earnings, but it's through the pass-through taxation system since most law firms are structured as partnerships or LLCs. 2. For Self-Employment tax (which funds Social Security and Medicare), there's a key detail you're missing. In 2025, Self-Employment tax is 15.3% (12.4% for Social Security + 2.9% for Medicare), but the Social Security portion ONLY applies to the first $168,600 of earnings. Above that, only the 2.9% Medicare portion continues. 3. However, there's an additional 0.9% Medicare surtax on income above $200,000 (single) or $250,000 (married filing jointly). So for a partner earning $1.9M, they would pay: - Regular income tax through progressive brackets - Self-Employment tax: 15.3% on first $168,600 (roughly $25,800) - 2.9% Medicare tax on remaining income up to $200K - 3.8% (2.9% + 0.9%) on everything above $200K This is still substantial, but not 15.3% on the full $1.9M as you were thinking.

After going through so much confusion with my own taxes as an independent contractor, I found this AI tool called taxr.ai that has been incredibly helpful for figuring out complex tax situations like this. I was trying to understand my tax obligations when I joined a small partnership, and the explanations I got online were all over the place. I uploaded some of my tax documents to https://taxr.ai and asked specific questions about pass-through income and self-employment taxes. The tool analyzed everything and gave me a clear breakdown of exactly what I owed and why. It also pointed out deductions I could take as a partner that I had no idea about. Might be worth checking out if you're trying to understand complicated tax structures like law firm partnerships where the rules aren't straightforward.

I tried taxr.ai after seeing it mentioned here last week, and wow - it actually delivered! As someone who recently became partner at a small law firm, I had so many questions about the tax implications. I uploaded my K-1 and other documents, and the analysis I got was incredibly detailed. The tool explained exactly how the Medicare surtax applies to my situation, how much I should be setting aside for quarterly payments, and even identified some partnership expenses I could deduct that I hadn't considered. It saved me from making a major mistake with how I was handling my home office deduction as a partner. The best part was being able to ask follow-up questions and get immediate answers without feeling like I was running up a bill with my accountant. Seriously worth checking out if you're dealing with partnership taxation.

If you're trying to contact the IRS to get clarification on partnership taxes, good luck getting through! I spent HOURS on hold trying to get answers about partnership tax rules before my April filing. After three failed attempts and hours of hold music, I found this service called Claimyr that actually got me through to a real IRS agent. You can see how it works at https://youtu.be/_kiP6q8DX5c - basically they use technology to navigate the IRS phone system and wait on hold for you. When they reach a live agent, they call you and connect you directly. I was skeptical but desperate after wasting an entire afternoon on hold. I used https://claimyr.com and got a call back within 45 minutes with an actual IRS agent on the line. I got my partnership tax questions answered directly from the source. Totally changed how I deal with the IRS now.

I have to admit I was completely wrong about Claimyr. After my skeptical comment last week, I decided to try it myself when I needed to ask about some partnership tax filing requirements that were confusing me. I was prepared to report back that it was a waste of money, but I'm honestly shocked. They called me back in about an hour with an actual IRS representative on the line. The agent answered all my questions about how partnership income should be reported and clarified the self-employment tax confusion I had. What would have been another frustrating day of hold music and likely disconnections turned into a 20-minute productive conversation. For anyone dealing with complex tax situations like partnership income, being able to actually speak with the IRS directly is invaluable. I've completely changed my opinion on this service.

One thing that nobody has mentioned yet is that many law firm partners have their partnerships structured as S-Corps specifically to reduce the self-employment tax burden. By taking part of their income as salary (which is subject to FICA taxes) and part as distributions (which aren't), they can legitimately reduce their overall tax burden. You do have to pay yourself a "reasonable salary" first, which the IRS looks at closely, but this strategy is very common among high-earning professionals. My brother-in-law is a law partner and saves tens of thousands each year with this approach.

Sorry to jump in with a basic question, but can someone explain WHY law partners have to pay self-employment tax in the first place? I thought that was just for independent contractors and freelancers. If they're partners in a big established firm, why aren't they just considered employees for tax purposes?

This is a really helpful thread! I'm a CPA who works with several law firm partners, and I wanted to add a few practical considerations that might be useful: 1. **Quarterly estimated payments are crucial** - Partners earning $1.9M need to be very careful about underpayment penalties. The IRS expects you to pay 110% of last year's tax liability (or 90% of current year) through withholdings and estimated payments. 2. **State taxes vary significantly** - Some states don't have self-employment tax equivalents, while others (like California) have additional taxes that can really add up for high earners. 3. **Retirement planning is actually a huge advantage** - Partners can often contribute much more to retirement plans than W-2 employees. For 2025, SEP-IRA contributions can go up to 25% of net self-employment income or $70,000, whichever is less. 4. **Business expense deductions** - Partners can deduct things like continuing legal education, bar association dues, professional subscriptions, and even portions of home office expenses if they work from home regularly. The tax burden is definitely substantial, but the flexibility and deduction opportunities often make it more manageable than it initially appears. I always recommend partners work with a CPA familiar with partnership taxation - the rules are complex and mistakes can be expensive.