How to Deduct Self-Employment Taxes

You must file form 1040 to claim a deduction for self-employment taxes.

Self-employment taxes take the place of payroll taxes--Social Security taxes and Medicare taxes--for people who work for themselves or as independent contractors. Self-employed individuals, however, must pay the entire tax rather than being able to split the taxes with their employer. To balance the extra tax impact, the Internal Revenue Service permits self-employed individuals to deduct half of the self-employment taxes paid.

Things You'll Need

• Schedule SE
• Form 1040

Instructions

1. File your taxes using form 1040 to claim the deduction. You must use form 1040 to file your taxes if you have self-employment income.

2. Consult your Schedule SE to determine how much you can deduct. The IRS requires self-employed individuals to use Schedule SE to calculate and report self-employment taxes. The amount on line 6 of Schedule SE equals the amount you can deduct.

3. Report the amount of your deduction on line 27 of your form 1040 tax return. This amount will be deducted from your taxable income, which will reduce your total income tax.

References

• Internal Revenue Service: Self-Employment Tax
• IRS: Form 1040 Instructions

Resources

• IRS: Schedule SE
• IRS: Form 1040