In this tax tutorial, you will learn about self-employment income and the self-employment tax.

Self-employed individuals are independent contractors, not employees.

• Self-employed individuals control the methods and means by which they perform services for others. You may be self-employed if you mow your neighbor's lawn, baby sit, or walk dogs in your neighborhood for cash.

For a business owned by just one person, self-employment income, expenses, and profit or loss are reported on Form 1040, Schedule C, Profit or Loss From Business.

• Self-employment profit increases the income that is subject to tax.
• Self-employment loss reduces the income that is subject to tax.

The self-employment tax is

• calculated on Schedule SE, Self-Employment Tax.
• reported on Form 1040, U.S. Individual Income Tax Return.

The self-employment tax increases the total tax.

An adjustment to income of one-half of a taxpayer's self-employment tax decreases the income that is subject to income tax. A self-employed person may also be eligible for a qualified business income (QBI) deduction on their tax return.