What is Self-Employment Tax?

Self-employment tax is a type of tax that individuals who work for themselves, rather than being employed by a company, may be required to pay. This tax consists of the Social Security (12.4%) and Medicare taxes (2.9%). If you are a W-2 earner your employer contributes half while elf-employed individuals are responsible for paying the full portion.

Who May Have to Pay Self-Employment Tax?

If you are self-employed, you might have to pay self-employment tax. This applies to a variety of self-employed individuals, including:

• Freelancers, Sole Proprietors, Independent Contractors and Small Business Owners

Self-employment tax typically becomes applicable when your net self-employment income exceeds a certain threshold. The tax covers contributions to Social Security and Medicare and ensures that self-employed individuals are responsible for both the employee and employer portions of these taxes.

To estimate your self-employment tax liability, you can use the calculator provided below. Simply enter your self-employment income for the year, and the calculator will provide you with an estimate of your potential tax obligation. Be mindful that you may be able to offset this income if you have qualifying expenses.