Yes the business tax is to pay the Social Security and Medicare tax you didn’t have taken out like on a W2 for wages. It is added to your tax return. Self employment tax is on the 1040 Schedule 2 line 4 which goes to 1040 line 23.
You will pay Self Employment tax (Scheduled SE) on a Net Profit of $400 or more on Schedule C in addition to regular income tax on it. You pay 15.3% SE tax on 92.35% of your Net Profit (If it is greater than $400). The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare. So you get social security credit for it when you retire.
You might want to send in quarterly estimated payments to cover it.
Turbo Tax guide to Estimated taxes
A Guide to Paying Quarterly Taxes - TurboTax Tax Tips & Videos
You must make quarterly estimated tax payments for the current tax year if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.
- 2. You expect your withholding and credits to be less than the smaller of:
90% of the tax to be shown on your current year’s tax return, or
100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months).
