As an employee, you had FICA tax withheld from your wages, and your employer
matched your contribution and remitted both to the IRS. As a self-employed
person, you are required to pay both halves of those taxes, called self
Self-employment tax is based on your NET earnings from self- employment, as explained in the instructions for Schedule SE.
Note, As an employee you had 7.65% withheld from your pay. However the true full rate is 15.3%. Your employer was required to pay 1/2 of the this tax.
As a Self-employed your are both the employee and employer thus you must pay the full 15.3% tax.
The 15.3% is broken down into two parts. Social Security and Medicare.
Social Security is 6.2% for 1/2 or 12.4% full.
Medicare is 1.45% for 1/2 or 2.9% full.
Medicare must always be paid but social security is limited each year to a max self-employed income at which time social security is no longer due.
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