🔗In the United States, the self-employment tax is a tax for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners.
This tax covers Social Security benefits and Medicare benefits. It ensures that self-employed individuals contribute to these federal programs like traditional employees.
🔗Paying the self-employment tax is mandatory if net earnings from self-employment exceed $400. This tax consists of two parts:
➡️ 12.4% goes to Social Security
➡️ 2.9%
🔗Higher earners might pay an additional 0.9% in Medicare taxes on income exceeding certain thresholds.
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