Individual retirement accounts offer tax-sheltered savings for retirement. When you take a withdrawal, you will receive a Form 1099-R that will document how much of your withdrawal is subject to income taxes.
Self-employment taxes do not apply to IRA withdrawals because money taken from an IRA counts as unearned income, according to the IRS. Only earned income is subject to self-employment taxes.
Withdrawals from a tax-deferred IRA must be included in your taxable income when filing your income taxes. Qualified distributions from Roth IRAs are tax-free.
The self-employment tax includes a medicare tax and a Social Security tax. As of 2010, the Medicare tax rate equals 2.9 percent and the Social Security tax equals 12.4 percent.
Do You Pay State or Federal Taxes on an IRA Withdrawal?
Most states tax IRA withdrawals the same way as the federal government, but some have different rules.
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