Tax Concepts

Self-Employment Tax

Self-employment tax is the Social Security and Medicare tax paid on qualifying self-employment earnings.

Quick answer

Self-employment tax is the Social Security and Medicare tax paid on qualifying self-employment earnings.

It matters because sole proprietors and many LLC owners can owe more than expected if they only plan for income tax.

A Schedule C filer with net profit generally owes both income tax and self-employment tax.

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Plain-English Definition

What Self-Employment Tax means

Self-employment tax is the Social Security and Medicare tax paid on qualifying self-employment earnings.

Why it matters It matters because sole proprietors and many LLC owners can owe more than expected if they only plan for income tax.
Simple example A Schedule C filer with net profit generally owes both income tax and self-employment tax.
Related Questions

Questions people ask about Self-Employment Tax

What does Self-Employment Tax mean?

Self-employment tax is the Social Security and Medicare tax paid on qualifying self-employment earnings.

Why does Self-Employment Tax matter?

It matters because sole proprietors and many LLC owners can owe more than expected if they only plan for income tax.

What is a simple example of Self-Employment Tax?

A Schedule C filer with net profit generally owes both income tax and self-employment tax.

When should I ask a CPA about Self-Employment Tax?

Ask a CPA when the term affects your tax bill, estimated payments, deductions, or a planning move before year end.

How is Self-Employment Tax different from Payroll Tax?

Self-Employment Tax means Self-employment tax is the Social Security and Medicare tax paid on qualifying self-employment earnings. Payroll Tax means Payroll tax usually refers to the employment taxes tied to wages, including withholding, Social Security, Medicare, and related employer obligations. The difference is that they apply to different tax, accounting, or business situations and should not be treated as interchangeable.

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