John M. Hoffman CPA

Frequently Asked Tax Questions

Self Employment Tax 

Self employment tax is the equivalent of social security and Medicare tax. In fact it is paid at the same rates and with the same limits. People who have their own business, work as independent contractors, or are partners in partnerships (or LLCs) are subject to this tax. The biggest difference between it and social security tax as an employee is that the self employed person pays both halves of the tax where in an employment relationship one half is paid by the employee and one half by the employer.

"What income is subject to self employment tax?"

"What is the rate that I pay in self employment tax?"

"Is there any maximum amount subject to self employment tax?"

"Is there a separate filing or place to send my self employment tax?"

"Is self employment tax mandatory or optional?"

"What if I already pay into social security at my full time job?"

"Do I get any benefit from paying this tax?"