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Why am I paying self-employment tax?

by Intuit Updated 4 months ago

Most often, self-employment tax is paid because you've entered self-employment income, either as cash or from a 1099-NEC, 1099-MISC or 1099-K form. If your self-employment income is $400 or more (after deducting expenses), you'll have to pay self-employment tax.

Note: Self-employment tax and income tax are two separate taxes. You can owe self-employment tax even if you don't need to pay income tax.

Other less common reasons to pay self-employment tax:

  • You have clergy income.
  • Your income as a church employee exceeds $108.28.
  • You received income from a partnership (Schedule K-1).

If you have a 1099 NEC or 1099-MISC form:

This could be self-employment income and you would pay taxes on it, based on the conditions described.

Examples of income that are not from self-employment include prize money, lawsuit settlement, research study, and others. You don’t need to pay self-employment tax on these types of income. We’ll figure this for you when you enter your 1099s.

If your 1099-NEC or 1099-MISC is incorrectly reporting your income, you should contact the payer and have them issue a corrected 1099.

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