What is the self-employment tax?
The self-employment tax (also called the SE tax) is the Social Security (FICA) and Medicare tax paid by self-employed individuals.
When you work for someone, your employer pays half of your FICA and Medicare and you pay the other half. But when you're self-employed, you pay all your FICA and Medicare tax (the SE tax) on top of your income tax. That's because the IRS considers you both employer and employee.
Unlike employees, self-employed taxpayers are able to deduct the "employer" half of their SE tax as well as mileage, vehicle depreciation, home office expenses, and other things that most wage-earners aren't able to claim.
Self-employment tax gets calculated and reported on Schedule SE.
- Why am I paying self-employment tax?
- What is Schedule SE?
- Is my clergy income subject to the self-employment tax?