What is self employment tax?
The self employment tax which is also officially known as the SECA tax (Self Employment Contributions Act tax) This tax you would never have had to pay as an employee and is the self employed version of the tax which is generally paid by employers and employees for social security and medicare.
When you’re self employed nothing is deducted from your check for social security and medicare taxes, instead you are required to make estimated self employment tax and income tax during the year.
If you don't make estimated tax payments throughout the year then you file these along with your tax return at the end of the financial year.
Self-employment tax (SE tax) is the Social Security and Medicare tax paid by self-employed individuals. The SE tax rate is 15.3% with 12.4% for Social Security and 2.9% for Medicare.
You can claim a federal deduction for half the SE tax you pay, if you are self employed. You will need to complete Schedule C and file it along with Form 1040.