When you work as someone who is self-employed, one of the costs of doing business is paying the self-employment tax. As you get ready to pay your taxes, don’t forget that you will need to add the self-employment tax.
What is the Self-Employment Tax, and Who Must Pay It?
The self-employment tax encompasses Medicare and Social Security taxes. For those who are more traditionally employed, these taxes are automatically taken out of the paycheck. The employer pays a portion of the tax, and the employee pays a portion.
Note that as a self-employed person, you will be responsible for the entire tax on your own — both the employer portion and the employee portion.