Calculates estimated self-employment tax (Social Security and Medicare) based on your net earnings.
Estimated Self-Employment Tax:
$0.00
Understanding Self-Employment Tax
Self-employment tax is a tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves. It's similar to the Social Security and Medicare taxes withheld from the pay of most wage earners.
The self-employment tax rate is 15.3%. This is broken down as:
12.4% for Social Security (up to an annual earnings limit).
2.9% for Medicare (no earnings limit).
How to Calculate Self-Employment Tax
The calculation involves a few key steps:
Determine your Net Earnings from Self-Employment: This is generally your gross income from self-employment minus your business expenses.
Calculate the Taxable Base: You can deduct one-half of your self-employment taxes when figuring your adjusted gross income (AGI). For calculation purposes, the tax is applied to 92.35% of your net earnings.
Apply the Tax Rates:
Social Security Tax: 12.4% on earnings up to the annual Social Security taxable maximum.
Medicare Tax: 2.9% on all net earnings subject to SE tax.
Example: Let's say your Net Earnings from Self-Employment are $50,000, and the Social Security maximum for the year is $168,600.
Step 1: Calculate the Taxable Base Percentage: Multiply your net earnings by 92.35% (0.9235).
$50,000 * 0.9235 = $46,175
Step 2: Determine Social Security Taxable Earnings: Since $46,175 is less than the $168,600 Social Security limit, the entire $46,175 is subject to Social Security tax.
Social Security Taxable Earnings = $46,175
Step 3: Calculate Social Security Tax: Apply the 12.4% rate.
$46,175 * 0.124 = $5,725.70
Step 4: Calculate Medicare Tax: Apply the 2.9% rate to the same taxable base.
$46,175 * 0.029 = $1,339.08
Step 5: Total Self-Employment Tax: Add the Social Security and Medicare taxes.
$5,725.70 + $1,339.08 = $7,064.78
Deductibility: You can deduct one-half of this self-employment tax ($7,064.78 / 2 = $3,532.39) when calculating your Adjusted Gross Income (AGI).
Important Considerations:
Taxable Maximum: The Social Security taxable maximum changes annually. Always use the correct year's limit.
Business Expenses: Ensure you accurately track and deduct all eligible business expenses to reduce your net earnings and, consequently, your self-employment tax.
Estimated Taxes: Self-employed individuals are typically required to pay estimated taxes quarterly to the IRS.
Deduction for One-Half SE Tax: Remember that you can deduct one-half of your calculated self-employment tax when determining your AGI. This calculator shows the total SE tax, not the AGI-deductible portion.
Consult a Professional: This calculator is for estimation purposes. Consult with a qualified tax professional or refer to IRS publications (like Publication 505) for definitive guidance.
function calculateSelfEmploymentTax() {
var netEarnings = parseFloat(document.getElementById("netEarnings").value);
var ssLimit = parseFloat(document.getElementById("ssLimit").value);
var resultValueElement = document.getElementById("result-value");
if (isNaN(netEarnings) || netEarnings < 0) {
resultValueElement.innerHTML = "Please enter a valid net earnings amount.";
resultValueElement.style.color = "#dc3545"; /* Red for error */
return;
}
if (isNaN(ssLimit) || ssLimit < 0) {
resultValueElement.innerHTML = "Please enter a valid Social Security limit.";
resultValueElement.style.color = "#dc3545"; /* Red for error */
return;
}
var taxableBasePercentage = 0.9235;
var socialSecurityRate = 0.124;
var medicareRate = 0.029;
var taxableBase = netEarnings * taxableBasePercentage;
var socialSecurityTaxableEarnings = Math.min(taxableBase, ssLimit);
var socialSecurityTax = socialSecurityTaxableEarnings * socialSecurityRate;
var medicareTax = taxableBase * medicareRate;
var totalSelfEmploymentTax = socialSecurityTax + medicareTax;
resultValueElement.innerHTML = "$" + totalSelfEmploymentTax.toFixed(2);
resultValueElement.style.color = "#28a745"; /* Green for success */
}