When you’re self-employed, you’re required to pay taxes on your income that are the equivalent of what an employer typically pays in Social Security and Medicare taxes.
Self-employment taxes are calculated on your net business profit (i.e. your business income minus business deductions). Usually, an employer will pay these taxes on your behalf, but as a business owner, you are now responsible for paying them.
If you’re using filing software, your self-employment tax will be automatically calculated for you when you report your business income. If you’re filing forms by hand, you can calculate your self-employment tax using Schedule SE. You can read more about Schedule SE and calculating your tax here.
If needed, the IRS has their instructions for filling out the Schedule SE on their website here: About Schedule SE (Form 1040), Self-Employment Tax
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