If you’re self-employed, you’re responsible for paying Social Security taxes on your own. This means that you’re required to pay both the employer and employee portions of the tax. But how do you calculate how much you owe? And what are the deadlines for payment?

First, it’s important to understand that the Social Security tax is part of the broader self-employment tax, which also includes Medicare taxes. For 2021, the self-employment tax rate is 15.3% on the first $142,800 of net income (your earnings minus expenses), and 2.9% on net income above that amount.

To calculate your self-employment tax, you’ll need to use Schedule SE (Form 1040 or 1040-SR). This form takes into account both your net income and the Social Security tax rate, which is 12.4% for 2021 (with 6.2% paid by you as the employee and 6.2% paid by you as the employer). You’ll also need to use Schedule SE to calculate your Medicare tax, which is 2.9% for all self-employed individuals.

It’s important to note that if you’re an employee in addition to being self-employed, you’ll still need to pay Social Security taxes on your employee income. However, you may be able to deduct a portion of those taxes on your self-employment tax return.

To pay your self-employment taxes, you have a few options. You can make estimated tax payments throughout the year, either online or by mail using Form 1040-ES. These payments are due quarterly, on April 15, June 15, September 15, and January 15 of the following year. Alternatively, you can choose to pay your entire tax bill when you file your annual tax return by April 15 of the following year.

Paying your self-employment tax can be a complex and confusing process, but it’s important to get it right in order to avoid penalties and ensure that you’re contributing to Social Security and Medicare. If you need help understanding your tax obligations as a self-employed individual, consider consulting a tax professional or using resources provided by the IRS.

Are you a self-employed entrepreneur struggling to understand social security taxes? If so, AFE, the Association for Entrepreneurship, is here to help. Our resources and experts can guide you through the process of calculating and paying self-employment taxes. Don’t let tax confusion hold you back from growing your business. Join AFE today and take control of your finances.


Article by
Christian Peterson
Marketing Manager

Christian Peterson