If you're self-employed, work as an independent contractor, or run your own business, you generally pay self-employment tax (SE tax) instead of having Social Security and Medicare taxes withheld from a paycheck.
When you work for an employer, you and your employer each pay a portion of these taxes through FICA withholding. When you're self-employed, you're responsible for both the employee and employer portions. Schedule SE is used to calculate the amount you owe. The Social Security Administration uses the information reported on Schedule SE to determine your future Social Security benefits.
Self-employment tax consists of:
- 12.4% Social Security tax
- 2.9% Medicare tax
This results in a combined self-employment tax rate of 15.3% on eligible self-employment income.
Who Must File Schedule SE?
You generally must file Schedule SE if either of the following applies:
- You have net earnings from self-employment of $400 or more.
- You have church employee income of $108.28 or more from a church or qualified church-controlled organization that did not withhold Social Security and Medicare taxes.
Even if you're already receiving Social Security benefits, self-employment tax may still apply to your business income.
Social Security Wage Limit
For tax year 2026 (returns filed in 2027), the maximum amount of income subject to the Social Security portion of self-employment tax is $184,500. All net earnings remain subject to the Medicare portion of self-employment tax.
How Does the Software Handle Schedule SE?
In most cases, the software automatically generates Schedule SE when you complete:
- Schedule C (Profit or Loss From Business), or
- Schedule F (Farming income)
The program will calculate the appropriate self-employment tax based on your reported net profit.
However, Schedule SE may not be automatically generated if:
- You have statutory employee income reported on Form W-2.
- You indicate that you are a member of the clergy when completing your business information.
- Your business has no net profit after expenses are entered.
Special Rules for Ministers and Members of Religious Orders
Ministers, members of religious orders who have not taken a vow of poverty, and Christian Science practitioners are generally required to pay self-employment tax on earnings from their ministerial services.
However, if you filed Form 4361 and received IRS approval for an exemption, you may be exempt from self-employment tax on qualifying ministerial earnings.
If you are a U.S. citizen or resident alien serving outside the United States and subject to self-employment tax as a minister or member of a religious order, you generally cannot reduce your self-employment earnings by the foreign earned income exclusion or foreign housing exclusion.
Program Entry
- Federal Section
- Other Taxes
- Self-Employment Tax (Schedule SE)
Important
If you've already completed a Schedule C or Schedule F, the program will generally calculate your self-employment tax automatically based on the profit reported from your business activities.
Can I Deduct Part of My Self-Employment Tax?
Yes. While you must pay both the employer and employee portions of Social Security and Medicare taxes, the IRS allows you to deduct the employer-equivalent portion of your self-employment tax as an adjustment to income. This deduction can help reduce your overall taxable income.
Additional Information
For detailed guidance, review the IRS instructions for Schedule SE and the IRS resources for self-employed individuals and small business owners here.