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Self-Employment Tax
The self-employment tax is similar to the social security tax and Medicare tax for employees.
The self-employment tax is calculated on Schedule SE, Self-Employment Tax.
The self-employment tax is paid on self-employment profit. You need to pay self-employment tax if you had net earnings from self-employment of $400 or more.
The self-employment tax increases the total tax on Form 1040.
An adjustment to income of one-half of a taxpayer's self-employment tax decreases the income that is subject to income tax.
Paying Self-Employment Tax
Many taxpayers have income from self-employment. The "pay as you go" system also applies to self-employment income. If the SE tax due on this income exceeds certain limits, estimated tax payments must be paid.