Tax
Self-Employment Tax
Combined Social Security + Medicare tax (15.3%) owed by self-employed individuals on net earnings.
Self-employment tax is the equivalent of FICA for self-employed individuals: they pay both the employer and employee portions. The base is 92.35% of net earnings from self-employment.
Schedule SE on the personal return calculates the tax. Half of SE tax is deductible as an above-the-line adjustment.
Common pitfalls
- Forgetting to include SE tax in quarterly estimated tax payments
- Underestimating the impact: 15.3% on top of regular income tax can mean a 40%+ marginal rate
Related service
See tax and CPA servicesHave a Self-Employment Tax situation in your business?
Federal, state, and local returns prepared and reviewed by a licensed CPA, with the planning done before year-end rather than after it.