Self Employment Tax for Caregivers

Caregivers may be subject to self-employment tax, depending on the circumstances.

Self-employment tax represents the Social Security and Medicare taxes for the self-employed. Caregivers may or may not be considered self-employed for purposes of this tax.

Tax Form

If you receive a W-2, the IRS says you are an employee and would not be subject to self-employment tax. If you receive a 1099, in most cases, the IRS says you are an independent contractor and would be subject to self-employment tax on your income.

Schedule C

If you receive a 1099, report your income on Schedule C of your 1040. You may also deduct any reasonable and necessary expenses incurred in the course of the business. For caregivers, this may include certain auto expenses, continuing education and unreimbursed expenses for your patients. Subtract your expenses from your income to calculate your net income from self-employment.

Schedule SE

Calculate self-employment tax on Schedule SE. For the 2010 tax year, the tax is 15.3 percent of your Schedule C net income up to $106,800 and 2.9 percent on any amount in excess of this threshold.

References

• IRS: Self-Employment Tax

Resources

• IRS: Form 1099
• IRS: Schedule C