Calculate Self-Employment Tax (1099)
Calculate SE tax, income tax, and quarterly estimated payments for freelancers and contractors.
Self-Employment Tax Explained
When you are self-employed, you pay both the employee and employer portions of Social Security (12.4%) and Medicare (2.9%) = 15.3% total. As a W-2 employee, your employer pays half. As a 1099 contractor, you pay it all. This is calculated on 92.35% of net self-employment income (a small adjustment). You can deduct half of SE tax from your income tax calculation.
Reducing Your Self-Employment Tax Bill
Business deductions reduce both income tax and SE tax. Maximize deductions: home office, health insurance premiums, vehicle expenses, equipment, software, and professional development. Retirement contributions (SEP-IRA up to 25% of net income, or Solo 401k up to $23,500 + 25% employer match) reduce income tax but not SE tax. An S-Corp election can reduce SE tax for higher earners ($80K+).
The single biggest tax mistake freelancers make: not paying quarterly estimated taxes. The IRS charges underpayment penalties of 8-10% (annualized) on missed quarterly payments. Set up automatic quarterly transfers to the IRS via EFTPS.gov — treat it like a bill, not an optional payment.
