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Self-employment tax is a tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves. It's similar to the Social Security and Medicare taxes withheld from the pay of most wage earners.

The self-employment tax rate is 15.3%. This rate is comprised of 12.4% for social security and 2.9% for Medicare.

Net earnings for self-employment tax are calculated by subtracting business expenses from business income. The result is then multiplied by 92.35% to determine the taxable amount.

Only a certain amount of net earnings is subject to the social security part of the self-employment tax. For 2023, this limit is $147,000.$

Self-employed taxpayers can deduct the employer-equivalent portion of their self-employment tax when calculating their adjusted gross income. This deduction is equal to 50% of the self-employment tax.

Self-employed individuals with net earnings exceeding $200,000 (or$250,000 for married couples filing jointly) pay an additional 0.9% in Medicare taxes on the amount exceeding these thresholds.

You must file an income tax return if your net earnings from self-employment were $400 or more. If your net earnings are below this threshold, you may not have to pay self-employment tax.$

Self-employed individuals generally must make estimated tax payments quarterly to cover their tax liability, including self-employment tax and income tax, if they expect to owe at least $1,000 in federal taxes for the year.$

Self-employed taxpayers use Schedule SE to calculate the self-employment tax owed based on net earnings from self-employment.

Self-employment tax is a separate tax from income tax, specifically for Social Security and Medicare, while income tax is levied on your earnings after certain deductions and exemptions.

Partners in a partnership must pay self-employment tax on their share of the partnership's income, even if it is not distributed, as long as it's earned income.

Self-employed individuals can deduct business expenses such as home office deductions, travel costs, and supplies, which can lower their net earnings and thus their self-employment tax liability.

If a self-employed individual has a loss from their business, they may not owe self-employment tax as it is based on net earnings; however, other tax implications may still apply.

Farmers are subject to self-employment tax on their net farm profits. Special rules can apply, such as income averaging for farmers which may affect the tax calculation.