Calculating self-employment tax is the process of determining the amount of taxes that self-employed individuals owe to the government. This tax is calculated based on the individual’s net income, which is their total income minus allowable business expenses. The self-employment tax rate is 15.3%, which is divided into two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).
It is important for self-employed individuals to calculate their taxes correctly in order to avoid penalties. Self-employment taxes can be paid quarterly or annually. Quarterly payments are due on April 15, June 15, September 15, and January 15. Annual payments are due on April 15 of the following year. Self-employed individuals can make their tax payments online, by mail, or by phone.
