DayCents

Self-Employment Tax

Self-employment tax is the 15.3% Social Security and Medicare tax that freelancers and business owners pay on their net earnings — covering both the employee and employer halves of FICA that a regular job splits with you. It's on top of income tax.

You can deduct half of it when figuring your income tax, which softens the blow. Because no employer withholds it, the self-employed usually make quarterly estimated payments to avoid a large bill and penalties at year-end.