Self-Employment Tax
The Social Security and Medicare tax that self-employed individuals pay on net earnings — currently 15.3% (12.4% Social Security + 2.9% Medicare).
Self-Employment Tax Definition
Self-employment tax is the self-employed person's version of FICA taxes. When you work for an employer, they pay half of Social Security and Medicare taxes. When you're self-employed, you pay both halves — the full 15.3%.
Rate Breakdown
Who Pays It
Tax Deduction
You can deduct 50% of your self-employment tax on your Form 1040. This is an "above the line" deduction — you get it even if you don't itemize.
How to Reduce Self-Employment Tax
FAQ
Q: Is self-employment tax in addition to income tax?
A: Yes. Self-employment tax is separate from and in addition to federal and state income tax. This is why self-employed people often have a higher effective tax rate.
Related Terms
> Need help making sense of your books? Ketchup cleans up your QuickBooks in 3–7 business days — so your numbers actually make sense. Get your price →
Related Terms
LIFO stands for Last In, First Out—an inventory costing method where the most recently purchased items are assumed to be sold first. When calculating cost of goods sold (COGS), LIFO uses the cost of your newest inventory purchases before moving to older ones. It's the opposite of FIFO and generally
A pricing strategy is the method a business uses to set prices for its products or services. It considers costs, competition, perceived value, and market positioning.
In bookkeeping, a credit is an entry on the right side of a journal entry or T-account that increases certain types of accounts and decreases others. Credits increase liabilities, equity, and revenue accounts. They decrease asset and expense accounts. Every transaction requires at least one credit a
Earned revenue is income that your business has legitimately recognized by delivering goods or services to customers. It's revenue you've actually "earned" through performance, not just money you've collected. On accrual basis, earned revenue appears on your P&L when the work is completed, regardles
Related Resources
Need these terms applied to your books?
Accounting Ketchup catches up your QuickBooks so the glossary becomes your reality. Flat rate.