What is the Self-Employment Tax?Self-employment tax consists of Social Security and Medicare taxes for individuals who work for themselves. Employees who receive a W-2 only pay half of the total Social Security (6.2%) and Medicare (1.45%) taxes, while their employer is responsible for paying the other half. Self-employed individuals are responsible for paying both portions of the Social Security (12.4%) and Medicare (2.9%) taxes. Show Do I have to pay Self-Employment Tax?If you (1) are self-employed as a sole proprietorship, an independent contractor or freelancer and (2) earn $400 or more, you may need to pay SE tax. This is true even if you are paid in cash and do not receive a 1099-MISC. Keep in mind, you may be able to offset this income if you have qualifying expenses.
Use this Self-Employment Tax Calculator to estimate your tax bill or refund. This tool uses the latest information provided by the IRS including annual changes and those due to tax reform. Gather your 2022 tax documents including 1099s, business receipts, bank records, invoice payments, and related documents to fill in the drop down sections. Explanations for each question are provided below in the chart. If you have questions about your self-employment taxes a Tax Pro can help. Use this calculator to estimate your self-employment taxes. Normally these taxes are withheld by your employer. However, if you are self-employed, operate a farm or are a church employee you may owe self-employment taxes. Please note that the self-employment tax is 12.4% for the FICA portion and 2.9% for Medicare. Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
Learn more about self-employed tax deductions
Are you self-employed? Here's how to determine if you are self-employed, what you can deduct from your self-employment income, and how self-employment affects your tax return. View more Home Business and Office Tax DeductionsSee if you qualify for any tax breaks for operating a business from your home. View more How a Second Job or Side Gig Affects Your TaxesCall it what you will: side job, side hustle, freelance gig – they can all affect your taxes and tax status. View more How do I calculate selfYou calculate your self-employment tax on Schedule SE and report that amount in the "Other Taxes" section of Form 1040. In this way, the IRS differentiates the SE tax from the income tax.
How is selfThis is calculated by taking your total 'net farm income or loss' and 'net business income or loss' and multiplying it by 92.35%. This is done to adjust your net income downward by the total employment tax that would have been paid by an employer, had you not been self-employed.
What is my selfSelf-employment income is earned from executing a "trade or business" as a sole proprietor, an independent contractor, or some form of partnership.
|