The Complete Guide to Self-Employment Tax

Working for yourself means handling taxes an employer would normally manage. This guide explains self-employment tax and how to stay ahead of it. It's general information, not tax advice.

What self-employment tax is

Self-employment (SE) tax covers Social Security and Medicare — the same FICA an employee splits with their employer, except you pay both halves: 15.3 percent on net earnings (with the Social Security portion capped each year). The Self-Employment Tax Calculator estimates what you owe.

It's on top of income tax

SE tax is separate from federal income tax — you owe both. A 1099 contractor with no withholding must plan for the combined bill, which surprises many first-year freelancers. The 1099 Tax Calculator helps estimate total tax so you can set money aside.

Quarterly estimated payments

Because no employer withholds for you, the IRS expects quarterly estimated payments; underpaying triggers penalties. The Quarterly Tax Calculator calculates what to send each period. A common approach is to set aside 25 to 30 percent of net income as you earn it.

The S-corp question

At higher self-employment income, electing S-corp status can reduce SE tax by splitting income into a reasonable salary (subject to payroll tax) and distributions (not subject to SE tax). It adds payroll and compliance costs, so there's a break-even. The S-Corp Savings Calculator models the potential savings.

Staying organized

Track income and deductible expenses all year, set aside taxes as you go, pay quarterlies on time, and revisit entity choice as income grows. The deductions available to the self-employed (home office, mileage, retirement contributions) meaningfully lower the bill — but only if you document them. Confirm specifics with a tax professional.

All calculators on this site

• Self-Employment Tax Calculator — Your SE tax (Social Security + Medicare) and the deductible half.
• 1099 Tax Calculator — Total tax on 1099 income — SE tax plus federal income tax.
• Quarterly Tax Calculator — Your four estimated quarterly payments.
• S-Corp Savings Calculator — How much an S-corp election could save you.

Frequently asked questions

What is self-employment tax?

Social Security and Medicare tax — 15.3% of net earnings — paid by the self-employed.

Is it separate from income tax?

Yes — you owe both, which surprises many new freelancers.

Do I have to pay quarterly?

Usually yes — the IRS expects estimated payments, and underpaying brings penalties.

When does an S-corp help?

At higher income, by splitting pay into salary and distributions; it adds costs, so there's a break-even.

Is this tax advice?

No — confirm with a tax professional.