The Self-Employment Tax – IRS Definition
Self-employment tax is a social security and Medicare tax primarily for individuals who work for themselves. It is similar to the social security and Medicare taxes withheld from the pay of most wage earners.
Self Employment Tax Calculation
If you are self-employed, you can determine your self-employment tax using Schedule SE of Form 1040.
You may deduct half of that tax as an above the line tax deduction. This deduction does not apply for wage earners. They can not deduct social security or Medicare taxes taken out of their paycheck.
Self Employment Tax Rate
The Self employment tax rate is 15.3%. The rate is divided as it follows: 12.4% for social security, (including disability insurance), and 2.9% for Medicare (hospital insurance).
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