Self-Employment Tax Calculator
Independent contractors and freelancers can use this calculator to estimate their self-employment tax liability.
These calculators are provided for estimates only. Calculations will not affect SurePayroll account information. You must enter payroll data directly into your SurePayroll account to process it for an upcoming payroll period. Log into your account here or by clicking Sign In at the top of the page. Please direct specific SurePayroll questions to Customer Care after logging in.
Information and interactive calculators are made available to you only as self-help tools for your independent use and are not intended to provide legal, investment or tax advice. We cannot and do not guarantee their applicability or accuracy in regard to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
What is Self-Employment Tax?
Employers are responsible for withholding payroll taxes from employee paychecks, contributing their share, then filing and depositing the payroll taxes with the Internal Revenue Service (IRS). This is called FICA (Federal Insurance Contribution Act), these payroll taxes fund Social Security and Medicare.
If you own your own business, are a sole proprietor, or work as an independent contractor you do not pay FICA tax. Instead, you will cover your Social Security and Medicare obligations through the Self-Employed Contributions Act (SECA).
According to the IRS, you must pay self-employment (SE) tax if your net earnings from self-employment (excluding church employee income) are $400 or more or if you had church employee income of $108.28 or more.
Self-Employment Tax Rates
The SECA rate is a fixed percentage applied to all taxable compensation. This includes salary, wages, tips, bonuses, commissions and taxable fringe benefits.
The 15.3% self-employment rate includes:
- 12.4% for Social Security
- 2.9% for Medicare
This rate has remained the same since 1990.
How to Calculate Self-Employment Tax
You can use the free self-employed tax calculator to input your specific information to get an estimate of your SE tax liability. You can also use Schedule SE in Form 1040 to estimate the tax you may owe.
The example below offers a basic way to estimate SE tax liability manually.
If you earned $70,000 in one tax year, your SECA calculation might look like this:
$70,000 x 15.3% = $10,710.
An additional Medicare tax of 0.9% kicks in after you earn $200,000 in a year.
How to Pay Self-Employment Tax
As a self-employed individual, you may have to file estimated taxes quarterly. According to the IRS, individuals and sole proprietors should plan to make estimated tax payments if they expect to owe more than $1,000 when they file their returns.
Quarterly due dates for filing taxes are:
- April 30 for the first quarter
- July 31 for the second quarter
- October 31 for the third quarter
- January 31 for the fourth quart of the previous calendar year
If you didn’t pay enough tax for the year, you may have to pay a penalty for underpayment of estimated taxes.
Self-Employment Tax vs Income Tax
Income tax is the amount you pay the state and federal government based on your annual income from all sources.
Self-employment tax is one component of income tax, which covers Social Security and Medicare. You can use a self-employment income tax calculator to estimate your income taxes.
Tax Deductions for Self-Employed Workers
As a self-employed individual, freelancer, or independent contractor, you might be able to lower your tax bill through the proper use of small business tax deductions. Not all tax breaks apply to every situation, but knowing the possible options can help guide a conversation with your tax professional.
Some small business tax write-offs from the IRS Tax Guide for Small Business could include expenses related to
- Home office
- Advertising and marketing
- Office supplies
- Vehicle
- Business travel
- Education and training
- Insurance premiums
- Legal and professional fees
- Interest
- Rent
You may also deduct the employer-equivalent part of your self-employment tax when calculating your adjusted gross income. Wage earners cannot deduct Social Security and Medicare taxes.
Independent Contractor Vs Employee Tax Differences
Employee. If you are employed as a W-2 employee, your employer calculates, withholds, and deposits your federal, state, and income tax based on how you completed your Form W4 (tax withholding). The employer also calculates, withholds, and files the employee portion of Social Security and Medicare. The employer matches the employee contribution to Social Security and Medicare. The employer is also responsible for paying federal unemployment (FUTA) and state unemployment insurance (SUI).
Independent Contractor. If you work as an independent contractor, you are responsible for paying the employee and employer portion of payroll taxes. The calculator on this page can also be used as an independent contractor tax calculator for payroll taxes.
Need Help Calculating Payroll Taxes?
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Let's answer some of your questions
The percentage of taxes you pay will depend on your income. Generally, self-employed individuals are responsible for paying 15.3% of their wages to cover their Social Security and Medicare tax obligations. You can estimate this with the self-employed taxes calculator on this page.
Small business owners, including self-employed individuals, might be able to lower their overall tax bill through the proper use of small business tax deductions for what the IRS calls ordinary and necessary business expenses.
Self-employed individuals generally should plan to pay estimated taxes quarterly.
Underpayment of estimated self-employment taxes could result in penalties and fines.
