How to Calculate Self-Employment Tax

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Part of the video series: Calculating Taxes

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Summary: A self-employed individual pays their side of the tax liability and the owner's side of the tax liability. Calculate self-employment tax, which is 15.3 percent if the individual makes up to 76.2 hundred dollars, with tips from an accountant in this free video on taxes and finances.

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By Doretha "Faye" Jones
eHow Presenter

Doretha "Faye" Jones has an MBA and over 20 years of accounting experience in addition to experience at Sarbanes Oxley audit support. Jones works with businesses and their valued...read more

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"So you're self employed and you want to know how to calculate your self employment tax. My name is Faye Jones. And I'm going to talk to you about being a small business owner. And a self employment tax, you might be faced with as a small business owner. First of all, take into consideration that if you make less than 400 dollars. There's no tax on that amount. But if you make up to 76.2 hundred dollars. The effective tax rate is 15.3%. And you wonder, where that number comes from. As an employee, your employer would pay .0765% of your gross earnings. As a tax on your behalf. And you would have that deducted from your check, .0765%. You add those two numbers together and you come up with a whopping 15.3%. As a self employed individual, that's the tax rate you have to apply to your earnings. You're paying your side of the tax, liability and the employer's side of the tax liability. Which is you. So I'm Faye Jones letting you know that if you're self employed. The self employment tax rate is 15.3%. If you make up to 76.2 hundred dollars."

eHow Article: How to Calculate Self-Employment Tax