The self-employed tax calculator a quick tool based on Internal Revenue Code, § 1401 to help a freelancer or self-employed taxpayer to compute three kinds of taxes – the Social Security tax, Medicare tax and additional Medicare tax that must be deducted and deposited to IRS . Self-employment tax calculator makes it easy for anyone to quickly get an estimated tax view for deposit of self-employment tax .
Self-employment tax calculator
Who needs to pay self-employment tax ?
The law regaring payment of self-employment tax is provided by Internal Revenue Code, § 1401 that provides in its first clause (a ) as under :
(a)Old-age, survivors, and disability insurance
In addition to other taxes, there shall be imposed for each taxable year, on the self-employment income of every individual, a tax equal to 12.4 percent of the amount of the self-employment income for such taxable year.
Who are self-employed individuals ?
An individual who falls in any of the following three types , must pay self-employment tax if income is more than $400 or more he/she earn $108.28 or more in income from church employment.
- carrying on a trade or business as a sole proprietor or an independent contractor
- Being a member of a partnership that carries on a trade or business
- Being otherwise in business for yourself (including a part-time business)
These taxes must be paid by every individual who is carrying on business or profession or on his salary or wages if income is more than $400 or more . You also need to pay self-employment tax if you he/she earn $108.28 or more in income from church employment.
Are Individuals who are not US citizen pay self emplyment tax ?
The law of self-emplyment tax does not apply on a peron who is not a US citizen or is a non-resident align.IRS has clarified “The Internal Revenue Code does not impose self-employment tax on the self-employment income of an individual who is neither a U.S. citizen nor a U.S. resident within the meaning of IRC section 7701(b)(1)(A), unless the self-employment tax liability is imposed under the terms of a Totalization Agreement. “
What is self-emplyment income for the purpose of self-emplyment tax?
Self-employment income is income that arises from the performance of personal services, but which cannot be classified as wages because an employer-employee relationship does not exist between the payer and the payee. The self emplyment tax is imposed only if the earner of self-emplyment income is a U.S. citizen or a U.S. resident as defined in section 7701(b)(1)(A) .
What is self employment tax rate for 2022 & 2023?
The total self-employment tax rate is 15.3% comprising 12.4% for Social Security and 2.9% for Medicare for both 2022 and 2023. But note that social security tax is applied on a maximum maxed $160,200 for the tax year 2022 (This was $147,000 for 2022). No such limits apply to the computation of Medicare tax.
|Particulars||Who needs to pay||2022 tax rate||2023 tax rate|
|Social Security Deposit||Employer and Employee (Both)||6.2%||6.2%|
|Medicare Tax||Employer and Employee (Both)||1.45%||1.45%|
|Additional Medicare Tax||Only employee||.0.9%||0.9%|
What is threshold for paying additional medicare tax?
Additional Medicare Tax @ 0,9% is imposed on an Individual only if the individual’s wages, compensation, or self-employment income (together with that of his or her spouse if filing a joint return) exceed the threshold amount for the individual’s filing status. The threshold is based on the filing status of the indiviual status .The threshold for additional medicare for both the year 2022 and 2023 are.
- Married filing jointly: $250,000
- Married filing separately: $125,000
- All other filing statuses: $200,000
Additional medicare tax is not contributed by an employer.
What if someone is already charged FICA tax ?
Section 1401 of IRC provides that additional medicare tax amount shall be reduced (but not below zero) by the amount of wages taken into account in determining the tax imposed under section 3121(b)(2) with respect to the taxpayer. Thus , it is clear same amount will not suffer both additional medicare tax and FICA tax at the same time.
How to report & pay self employment tax?
You need to report your self-employment earnings via IRS Schedule C and also IRS Schedule SE to calculate how much self-employment tax you owe. Then, you may need to examine if you need to pay estimated tax which is to be paid quarterly .I suggest you to read Estimated Tax :Who ,When & How to Pay ?. See this calculator on the estimated tax penalty calculator.
Have you read 25 tax deductions for self employed business?