Self Employment Tax
Posted on Mar 19, 2008 under TAX |If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!
Self-employment tax or SE tax is primarily a social security and medicare tax intended for individuals who labor for themselves. It is structured on the parallel lines to the social security as well as medicare taxes that are withdrawn from the income of majority of the wage earners.
SE tax can be figured with the usage of the Schedule SE (Form 1040). In fact, you can also withhold almost half of your SE tax in figuring your accustomed gross earnings. This deduction only affects your income tax. It does not affect either your net earnings from self-employment or your SE tax.
The rate of self-employment tax is 15.3%, which consists of two parts. One of the two part includes 12.4% for social security comprising old-age, survivors, and even disability insurance. The other remaining part is inclusive of 2.9% intended for medicare or hospital insurance.
If you are employing a tax year other than the calendar year, then you should employ the tax rate and maximum earnings parameter in effect at the commencement of your tax year. In case your maximum earnings limit or tax rate changes, you are entitled to continue the use of the similar rate and limit all through your tax year.
Tags: medicare taxes, SE tax, self-employment tax, tax rateTrackback URL
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