What Is a SECA Tax?

The Self-Employment Contributions Act (SECA) tax is the Social Security and Medicare tax paid by self-employed individuals who file Schedule C and farmers who file Schedule F with their IRS Form 1040. SECA is also called the self-employment tax.

SECA vs. FICA

If you are an employee, your Social Security and Medicare tax is called FICA (Federal Insurance Contributions Act). If you are self-employed, the tax is called SECA.

Tax Rates

As of 2009, the basic SECA tax rate is 15.3 percent. The FICA rate is 7.65 percent because the employer also pays 7.65 percent. The self-employed person must pay both the employee and employer parts of the tax.

Income

The SECA tax is based on your net self-employment income, that is, the income after business expenses. No tax is required if the income is less than $400.

Calculating SECA

You calculate and pay SECA by filing a Schedule SE.

Who is Self-Employed?

According to the IRS, you are self-employed if any one of three conditions apply to you: you carry on a trade or business as a sole proprietor or an independent contractor, you are a member of a partnership that carries on a trade or business, or you are otherwise in business for yourself.

References

• Self-Employment Tax
• IRS: Self-Employment Tax