Question 1

What is self-employment tax?

Accepted Answer

Self-employment (SE) tax is the Social Security and Medicare tax that self-employed individuals pay. Unlike employees, who split these taxes with their employer, the self-employed pay both portions — 12.4% Social Security and 2.9% Medicare, for a total of 15.3%.

Question 2

How is self-employment tax calculated?

Accepted Answer

First, multiply your net profit by 92.35% to get net earnings subject to SE tax. Then apply 15.3% (12.4% Social Security up to the wage base, plus 2.9% Medicare with no limit). If your net earnings are $400 or less, you generally do not owe SE tax.

Question 3

Can I deduct part of my self-employment tax?

Accepted Answer

Yes. You can deduct the employer portion — 50% of your total SE tax — from your Adjusted Gross Income (AGI) on Form 1040. This deduction reduces your overall taxable income.

Question 4

What is the Additional Medicare Tax for the self-employed?

Accepted Answer

If your combined wages and self-employment earnings exceed the threshold for your filing status ($200,000 single, $250,000 married filing jointly, $125,000 married filing separately), an additional 0.9% Medicare tax applies to the excess.

Self-Employment Tax Calculator

Self-Employment Tax Calculator

Your Self-Employment Tax

How Self-Employment Tax Works

1. Net Earnings

2. SE Tax Rate

3. Additional Medicare

4. Deduction