What is self-employment tax and how do I calculate it?
When you’re self-employed, you’re required to pay taxes on your income that are the equivalent of what an employer typically pays in Social Security and Medicare taxes.
Self employment taxes are calculated on your net business profit (i.e. your business income minus business deductions). Usually an employer will pay these taxes on your behalf, but as a business owner, you are now responsible for paying them.
If you’re using a filing software, your self-employment tax will be automatically calculated for you when you report your business income. If you’re filing forms by hand, you can calculate your self-employment tax using Schedule SE. You can read more about Schedule SE here.