Self-employment tax generally covers Social Security and Medicare taxes on qualifying net earnings. It is separate from federal income tax, even when both are reported through your individual return.

A deduction for the employer-equivalent portion does not eliminate the underlying tax. Include it when estimating payments or comparing business structures.

Your next steps

• Prepare an accurate net-income calculation.
• Review the applicable thresholds and limits.
• Include self-employment tax in your cash planning.

General education, not individualized tax or legal advice. Illustrations use stated assumptions and do not promise a refund or tax saving.