Intro to Earning
Taxes for the Self-Employed
OK, but what about independent contractors and self-employed people? Who pays the employer portion of Social Security and Medicare taxes?
What happens if you’re self-employed and you fall behind on paying your estimated taxes?
No problem, you can catch up later in the year
Every self-employed person is allowed to miss the deadline once a year
You can apply for a federal loan to cover the shortfall
You may have to pay penalties and interest
What is the Social Security tax rate for the self-employed?
12.4%
Self-employed people are exempt from the Social Security tax
2.9%
6.2%
What’s the Medicare tax rate for the self-employed?
Self-employed people are exempt from the Medicare tax
2.9%
1.45%
12.4%
How often do self-employed people have to pay their estimated taxes?
Once a year
They don’t have to pay estimated taxes because they’re automatically deducted from their paycheck
Once a quarter
Once a month
How much do people who work for themselves pay in self-employment taxes?
About 15 percent
About 12 percent
They are exempt from self-employment taxes
About 6 percent