What Is the Standard Self-Employment Tax Rate?
Self-employment taxes refer to the payroll taxes you must pay. Employees also pay these taxes but they are split between the employee and employer.
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Types
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Self-employment taxes have a Social Security component and a medical tax component.
Calculation
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The Medicare tax rate equals 2.9 percent and the Social Security tax rate equals 12.4 percent, for a total self-employment tax rate of 15.3 percent in 2010. For 2011, Congress passed a one-year reduction in the Social Security tax for employees, making that figure 10.4 percent instead of 12.4 percent.
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Limits
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The Social Security portion of the self-employment tax only applies to the first $106,800 of your income in 2010. This amount adjusts each year for inflation.
Function
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You must pay self-employment taxes if you have self-employment income of $400 or more or if you earn at least $108.28 from church income.
Significance
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If you owe self-employment taxes, you will have to make estimated payments during the year because you do not have any money withheld from your taxes.
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