Introduction

Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. It is similar to the social security and Medicare taxes withheld from the pay of most wage earners.

You usually have to pay SE tax if you are self-employed. You are usually self-employed if you operate your own farm on land you either own or rent. You have to figure SE tax on Schedule SE (Form 1040).

Farmers who have employees may have to pay the employer’s share of social security and Medicare taxes as well. See chapter 13 for in- formation on employment taxes.

If your self-employment income exceeds a certain threshold amount, you may also be subject to a 0.9% Additional Medicare Tax on the

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income that is more than that amount. You figure this tax using Form 8959. For more information about the Additional Medicare Tax, including the threshold amounts, see the Instructions for Form 8959.

SE tax rate. The SE tax rate is 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).

Topics This chapter discusses:

• Why pay SE tax

• How to pay SE tax

• Who must pay SE tax

• Figuring SE earnings

• Landlord participation in farming

• Methods for figuring net earnings

• Reporting SE tax

Useful Items You may want to see:

Publication

the income is earned in 1 quarter or is spread over 2 or more quarters.

For an explanation of the number of credits you must have to be insured and the benefits available to you and your family under the social security program, consult your nearest Social Security Administration (SSA) office or go to the SSA website at SSA.gov .

Form W-7, Application for IRS Individual Taxpayer Identification Number. You can download Form W-7 from the IRS website at IRS.gov . For more information on ITINs, see Pub. 1915. Form W-7 and Pub. 1915 are also available in Spanish.

If you were assigned an ITIN before