| As a regular employee of a company, you are | | | | are considered self employed, visit the following link. |
| required by the Internal Revenue Service to have | | | | [ |
| withheld from you earnings FICA (Federal Insurance | | | | Ok, you have determined that you are in fact |
| Contributions Act) and Medicare taxes. FICA is also | | | | considered self employed by the IRS. Now, how do |
| known as the Social Security tax. You pay these | | | | you know if you are required to pay the Self |
| taxes into the government and they are used for | | | | Employment Tax? |
| retired, unemployed, and disabled Americans and their | | | | If you had net earnings of $400 or more in the year, or |
| dependants in the form of Social Security payments | | | | if you had church employee income of $108.28 or |
| and Medicare benefits. | | | | more, you are required to pay the self employment |
| The Self Employment (SE) Tax is similar to these | | | | tax on those earnings. |
| aforementioned taxes except that they are for self | | | | How to pay the tax is the next thing you should know. |
| employed individuals and are imposed on self | | | | In order to pay self employment taxes you must have |
| employed earnings. It allows those who are self | | | | one (1) of the following: |
| employed to be eligible for these benefits later in life, | | | | - A social security number or |
| just as an employee is. | | | | - An Individual Taxpayer Identification Number (ITIN) |
| The current rate for self employment tax is 15.3%. | | | | Since income tax is a pay as you go tax, you have to |
| That percentage is broken down into two (2) parts: | | | | pay the tax as you earn your income during the year. |
| 12.4% is for Social Security and 2.9% is for Medicare. | | | | If your expected tax liability is more than $1,000, |
| Even if you are receiving Social Security or Medicare | | | | including the self employment tax, and you have no |
| benefits and no matter your age you are still | | | | taxes withheld, you must make estimated tax |
| responsible for the self employment tax. | | | | payments. Click here for more information on |
| In order to determine if you are responsible for this tax | | | | estimated taxes. |
| you must first know if you are considered self | | | | The following forms are a few that may be needed |
| employed by the IRS. What exactly qualifies a person | | | | when dealing with the self employment tax: (Please |
| as self employed to the IRS you may ask? | | | | note this is not an all inclusive list and other forms may |
| According to the IRS you are self-employed if any of | | | | be required by the IRS.) |
| these apply to you: | | | | - Form 1040 US Individual Tax Return |
| - You carry on a trade or business as a sole | | | | - Schedule SE Self Employment Tax: Figure your self |
| proprietor; | | | | employment net earnings. Be sure you figure your total |
| - You are a member of a partnership or limited liability | | | | earnings that are included in the self employment tax. |
| company that files a Form 1065, U.S. Return of | | | | - Short Schedule SE: Some can file the shortened |
| Partnership that carries on a trade or business; or | | | | version of Schedule SE. Follow the guide to determine |
| - You are otherwise in business for yourself. | | | | if this is possible in your situation. |
| (Examples: Independent Contractor, Direct Sales, etc.) | | | | - Schedule C Profit or Loss from Business: Enter your |
| - You have a part-time business, in addition to your | | | | business income and expenses, cost of goods sold, |
| regular job.For more information on whether or not you | | | | and/or vehicle and mileage information. |