Preparing Your Tax Return(s) and Information Returns

Business Taxes

Self-Employment Tax

Self-employment tax is the social security and Medicare tax for individuals who work for themselves. Your payments of self-employment tax contribute to your coverage under the social security system. Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and medical insurance (Medicare) benefits.

You must pay self-employment tax if your net earnings from self-employment are $400 or more.

TAX TIP: Deduct one-half of your self-employment tax as an adjustment to income on your Form 1040.

Important References

Publication 583                         Starting a Business and Keeping Records
Form 1040 Schedule SE         Self-Employment Tax
1040 Schedule SE Instructions