What is a self employment tax calculator?
A self employment tax calculator is an online tool that helps you calculate your self employment tax. A self employment tax is a social security and Medicare tax self-employed individuals pay on their net earnings.
Where can I find a free self employment tax calculator?
There are a number of free self employment tax calculators available online that you can use:
Why should I use a self employment tax calculator?
If you run your own business (sole proprietor), work as an independent contractor, are a member of a partnership or a limited liability company (but only if that LLC has elected not to be treated as a corporation), then you have to pay a self-employment tax. The self employment tax is usually around 15% of your net income. But the above calculators can help you discover the exact amount you’ll need to pay given your net earnings. These calculators will typically show you both the FICA and Medicare tax you can expect to pay.
If you’re considering starting a new business or transitioning from employee to independent contractor, you’ll want to consider all the financial repercussions of that decision, including the additional amount you’ll have to pay in employment tax. In an employee scenario, the employer pays half of the Medicare and social security tax and the employee pays the other half. Self-employed individuals, on the other hand, have to pay the entire employment tax themselves because they are, in essence, both the employer and the employee.
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