Self-Employment Tax

SLB23 — Tue, 24 Feb 2026 07:03:02 GMT

I am retired. Most of my income is now from dividends, interest, a pension, etc., (I am not yet collecting social security) but I did make just under $400 this year at a side gig as an independent contractor. I understand that if you make $400 or more, you need to pay a 15.3% self-employment tax, on top of income tax. Would the 15.3% tax only be applied to any amount OVER $400, or would it then apply to the entire amount earned as an independent contractor? I will probably make more than $400 at this side gig next year so just planning ahead! Thanks

Re: Self-Employment Tax

marctu — Wed, 30 Aug 2023 20:05:35 GMT

@SLB23 thank you for the question and congratulations on your “working retirement”. So, Self-Employment tax applies to the entire net earnings, and not just the amount exceeding $400 of net earnings. So you start from the first dollar of net earnings. Though there is a wrinkle to the calculation of the $400 net earnings. It is only 92.35% of the net earnings.

You can calculate it using the IRS form for planning purposes. See: https://www.irs.gov/pub/irs-pdf/f1040sse.pdf

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topic Self-Employment Tax in Self employed

Self-Employment Tax

Re: Self-Employment Tax