Self-employment tax
Self-employment tax is a tax paid by self-employed individuals on their net earnings from self-employment. Self-employment tax is a combination of Social Security and Medicare taxes. The self-employment tax rate is 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).
Self-employment tax is due on net earnings from self-employment. Net earnings from self-employment are defined as gross income minus allowable business deductions. Business deductions can include expenses such as rent, utilities, supplies, and travel.
Self-employment tax is calculated on Schedule SE (Form 1040 or 1040-SR). Schedule SE is used to calculate the self-employment tax liability and to figure the amount of self-employment tax that is deductible on Form 1040 or 1040-SR.
Self-employment tax is due on April 15th of the year following the year in which the net earnings from self-employment were earned. Self-employed individuals can make quarterly estimated tax payments to avoid penalties.
Self-employed individuals who have net earnings from self-employment of $400 or more are required to file Schedule SE and pay self-employment tax.
There are a few things to keep in mind about self-employment tax:
- Self-employment tax is a tax on your net earnings from self-employment.
- Self-employment tax is due on April 15th of the year following the year in which the net earnings from self-employment were earned.
- Self-employed individuals can make quarterly estimated tax payments to avoid penalties.
- Self-employed individuals who have net earnings from self-employment of $400 or more are required to file Schedule SE and pay self-employment tax.