💡 Who Is Subject to the Self-Employment Tax?

🚀 There are several types of workers that have to pay the self-employment tax.

💫 Freelancers

Freelancers, who function as independent workers taking on projects from various clients, are subject to self-employment tax when their income surpasses the $400 threshold.

💫 Independent Contractors

Independent contractors are similar to freelancers but often work with fewer clients on a more regular basis. Like freelancers, they are responsible for their own Social Security and Medicare taxes, which are covered under self-employment tax. For independent contractors, understanding the distinction between being an employee and a contractor is important.

💫 Gig Workers

Gig workers, participating in the gig economy through platforms like Uber or Airbnb, must also pay the self-employment tax if their income exceeds $400. These workers do not have an employer to withhold or pay Social Security and Medicare taxes on their behalf, making the self-employment tax their responsibility.

💫 Online Sellers

Online sellers, including eCommerce store owners or individuals selling goods on platforms like eBay or Etsy, are subject to the self-employment tax when their net earnings surpass $400. Given the online nature of their business, maintaining detailed sales records and expenses is crucial.

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