Schedule SE is the Social Security and Medicare tax on work that did not go through a W-2. It is not your income tax. W-2 wages use the Social Security wage base first, which can wipe out the 12.4% portion.
Net earnings = profit × 92.35%. SE tax = 12.4% of the wage-base slice + 2.9% of all net earnings.
Self-employment tax is 12.4% Social Security plus 2.9% Medicare on 92.35% of net profit. W-2 Social Security wages use the $184,500 base first. Half of this tax is deductible. The 0.9% Additional Medicare Tax is separate and is not part of the Schedule SE line.
| Net earnings | $73,880.00 |
|---|---|
| Social Security, 12.4% | $9,161.12 |
| Medicare, 2.9% | $2,142.52 |
| Additional Medicare, 0.9% | $0.00 |
| Schedule SE tax | $11,303.64 |
| Deductible half of SE tax | $5,651.82 |
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Only 92.35% of net profit is taxed. If that result is under $400, Schedule SE tax is zero. The 12.4% portion applies to the smaller of net earnings and the room left under $184,500 after W-2 Social Security wages.
The 2.9% Medicare portion applies to every dollar of net earnings. An extra 0.9% Additional Medicare Tax can apply above $200,000 (single, head of household, or qualifying surviving spouse), $250,000 joint, or $125,000 married filing separately. That extra tax is not part of the Schedule SE total shown as the result.
| Social Security | $9,161.12 |
|---|---|
| Medicare | $2,142.52 |
| Schedule SE tax | $11,303.64 |
| Social Security | $0.00 |
|---|---|
| Medicare | $2,142.52 |
| Schedule SE tax | $2,142.52 |
Form 1040-ES tells you to multiply net profit by 92.35% before the 12.4% and 2.9% rates. That factor stands in for the employer half a W-2 worker never pays income tax on. You then deduct half of the SE tax itself when you figure income tax.
Social Security wages on the W-2 use the $184,500 base first. Once wages reach the base, the 12.4% part of self-employment tax is zero and only the 2.9% Medicare part remains.
No. The 0.9% Additional Medicare Tax is figured on Form 8959 and is shown here as its own line. The result at the top is the Schedule SE tax only.