How to Pay Self-Employment Taxes

by Shanika Chapman ; Updated July 27, 2017
Self-employment tax is Social Security and Medicare taxes for the self-employed.

Items you will need

  • Computer
  • Form 1040
  • Schedule SE
  • Schedule C or C-EZ or
  • Schedule F or
  • Form 8829

The Internal Revenue Service (IRS) has specific tax requirements for the self-employed. As a self-employed person, you do not pay payroll taxes; instead, the IRS requires you to pay a self-employment tax, which is a percentage of Social Security and Medicare taxes. Typically, you will pay your taxes quarterly to avoid penalties. You can mail your self-employment tax payment or pay online.

Step 1

Download a Form 1040; Schedule SE; Schedule C, Profit or Loss from Business; Schedule C-EZ, Net Profit from Business; or a Schedule F, Profit and Loss from Farming; and a Form 8829, Expenses for Business Use of Your Home (if applicable).

Step 2

Determine your business expenses. Fill out a Schedule C-EZ if your business expenses were less than $5,000. Otherwise, fill out a Schedule C. This will give you your net profit.

Step 3

Determine your net earnings on your Schedule SE form using the information from your Schedule C, Schedule C-EZ, or Schedule F. Multiply your net profit or loss by 92.35 percent. If your earnings are more than $400, you must pay self-employment tax.

Step 4

Calculate your self-employment tax by multiplying your net earnings by 15.3 percent. Put this figure on Line 56 of Form 1040. Complete the rest of your 1040.

Step 5

Add your self-employment tax to your income tax. If your tax liability is more than $1,000, you must make quarterly estimated tax payments. In that case, divide your tax liability by four to get your quarterly estimated tax payments. Pay your taxes each quarter no later than the 15th of January, April, June and September. You can pay your taxes online at Electronic Federal Tax Payment System (EFTPS) or mail them to your designated IRS office (see the Where to File Paper Tax Returns link below).

Tips

  • Fill out a Form 8829 if you used your home for business.

    Dividends, loan interest and rental income do not count toward your self-employment taxable income.

    You can deduct half of your self-employment tax when determining your adjusted gross income.

About the Author

Shanika Chapman has been writing business-related articles since 2009. She holds a Bachelor of Science in social science from the University of Maryland University College. Chapman also served for four years in the Air Force and has run a successful business since 2008.

Photo Credits

  • Thomas Northcut/Photodisc/Getty Images