2023 Form Schedule SE - Self Employment Tax

If you're self-employed, one of the most important tax forms you'll need to be familiar with is Schedule SE (Form 1040). The Internal Revenue Service (IRS) requires self-employed individuals, such as freelancers, independent contractors, sole proprietors, and partners in a business, to calculate and report their self-employment tax using this form.

What is Self-Employment Tax?

Self-employment tax is a Social Security and Medicare tax primarily for individuals who work for themselves. When you are employed by someone else, your employer withholds Social Security and Medicare taxes from your paychecks and matches the amounts withheld. However, if you're self-employed, you're responsible for paying both the employer and employee portions of these taxes yourself, which is why the self-employment tax rate is higher than the payroll tax rate for employees.

For 2023, the self-employment tax rate is:

• 12.4% for Social Security (up to the Social Security wage base, which is $160,200 for 2023)
• 2.9% for Medicare (on all net earnings, with an additional 0.9% Medicare tax on earnings over $200,000 for single filers or $250,000 for married couples filing jointly)

Who Needs to File Schedule SE?

You are required to file Schedule SE if your net earnings from self-employment were $400 or more during the tax year. Net earnings are your total self-employment income after deducting any business expenses. Even if your self-employment income is minimal, you still need to report it and pay self-employment tax if it exceeds the $400 threshold.

In addition to traditional self-employed individuals, certain others may need to file Schedule SE, including:

• Partners in a partnership: Partners report their share of the partnership's income on Schedule K-1 (Form 1065) and may need to file Schedule SE to pay self-employment tax on that income.
• Members of certain religious groups: Some members of recognized religious groups who are exempt from paying Social Security and Medicare taxes may not need to file Schedule SE, depending on specific criteria.

For the current year's Form 1040 Schedule SE, click here.