What Is Self-Employment Tax? | A Complete Guide by Z-Tax & Accounting

Understanding Self-Employment Tax

If you’re a freelancer, contractor, or small business owner, you’re responsible for paying self-employment tax in addition to your regular income tax. Unlike traditional employees, self-employed individuals must pay both the employer and employee portions of Social Security and Medicare taxes.

At Z Tax and Accounting in Irving, TX, we help self-employed professionals navigate complex tax rules, calculate accurate payments, and find deductions to reduce their overall tax burden.

What Is Self-Employment Tax?

Self-employment tax is the combined tax rate used to cover contributions to Social Security and Medicare. For 2025, the self-employment tax rate is 15.3%, which includes:

• 12.4% for Social Security
  
  

• 2.9% for Medicare
  
  

If your net earnings from self-employment are $400 or more in a year, you’re generally required to pay this tax.

You’ll report and pay this tax using Schedule SE (Form 1040) when filing your annual tax return.

Who Pays Self-Employment Tax?

You must pay self-employment tax if you earn income as a:

• Freelancer or independent contractor
  
  

• Sole proprietor
  
  

• Member of a partnership
  
  

• Owner of an LLC (if taxed as a sole proprietorship or partnership)
  
  

Even if you also have a regular job with a W-2, your side business income may still be subject to self-employment tax.

How Self-Employment Tax Is Calculated

Self-employment tax is based on your net earnings—that is, your total income from self-employment minus any deductible business expenses.

Example:

If you earn $80,000 from freelance work and deduct $20,000 in business expenses, your net earnings are $60,000.
You would then pay:

• 15.3% of $60,000 = $9,180 in self-employment tax.
  
  

The good news is that you can deduct half of your self-employment tax when calculating your adjusted gross income (AGI).

Common Deductions for the Self-Employed

Proper deductions can significantly reduce how much self-employment tax you owe. Some of the most common deductions include:

• Home office expenses
  
  

• Business mileage
  
  

• Internet and phone usage
  
  

• Office supplies and equipment
  
  

• Health insurance premiums
  
  

• Retirement plan contributions
  
  

At Z Tax and Accounting, we work with self-employed clients in Irving and the DFW Metroplex to identify all allowable deductions and ensure every dollar is accurately reported.

Self-Employment Tax vs. Income Tax

It’s important to note that self-employment tax is separate from federal income tax.

• Self-employment tax covers your Social Security and Medicare contributions.
  
  

• Income tax covers your share of federal government operations and programs.
  
  

Both are calculated on your annual income tax return, but they serve different purposes and have different rules.

How to Pay Self-Employment Taxes

Most self-employed individuals must make quarterly estimated tax payments throughout the year. These payments cover both income and self-employment taxes and are typically due:

• April 15
  
  

• June 15
  
  

• September 15
  
  

• January 15 (of the following year)
  
  

Missing these deadlines can lead to penalties and interest. Working with Z Tax and Accounting ensures your quarterly and annual payments are always on time.

Why Work With Z Tax and Accounting

At Z Tax and Accounting in Irving, Texas, we specialize in helping self-employed individuals, freelancers, and small business owners with:

• Self-employment tax filing (Schedule SE)
  
  

• Quarterly estimated tax planning
  
  

• Small business accounting and bookkeeping
  
  

• Maximizing deductions to lower taxes
  
  

• IRS compliance and audit support
  
  

We take the stress out of self-employment taxes so you can focus on growing your business.

Final Thoughts

Understanding and managing your self-employment tax is a key part of being your own boss. By keeping accurate records and planning ahead, you can avoid tax surprises and keep more of your earnings.

Whether you’re a freelancer, gig worker, consultant, or entrepreneur, Z Tax and Accounting in Irving, TX provides personalized tax solutions to help you stay compliant and financially secure.

📍 Contact Z Tax and Accounting

Z Tax and Accounting
600 E John Carpenter Freeway, Suite 268
Irving, TX 75062
📞 Call: (214) 699-4790

Your trusted partner for self-employment tax filing and small business tax services in Irving, Texas.