Self Employment Taxes

Use this calculator to estimate your self employment taxes. Normally these taxes are withheld by your employer. However, if you are self employed, operate a farm or are a church employee you may owe self employment taxes. This calculator uses the preliminary 2004 tax tables, subject to modifications by the IRS and changes in the tax code.

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Your self employment tax is estimated at TOTAL_TAXES.

Your estimated self employment taxes include FICA_TAX for FICA and MEDICARE_TAX for Medicare. This was based on TAXABLE_AMOUNT of income subject to self employment taxes. Your employment income of EMPLOYER_PAID_INCOME reduced your FICA tax by EMPLOYER_TOTAL_FICA. This included EMPLOYER_FICA withheld from your pay and EMPLOYER_FICA paid by your employer. This calculator uses the preliminary 2004 tax tables, subject to modifications by the IRS and changes in the tax code.

Calculation Summary
Net farm income or loss	NET_FARM_INCOME_OR_LOSS
Net business income or loss	NET_BUSINESS_INCOME_OR_LOSS
Self employment income subject to self employment taxes This is calculated as TAX_FACTOR times your net farm and business income. If the total is less than SELF_EMPLOYMENT_MINIMUM you do not owe any self employment taxes on this income.	SELF_EMPLOYMENT_INCOME
Church employee income	CHURCH_EMPLOYEE_INCOME
Church employee income subject to self employment taxes This is calculated as TAX_FACTOR times your church employee income. If this amount is less than CHURCH_EMPLOYMENT_MINIMUM you do not owe any self employment taxes on this income.	NET_CHURCH_EMPLOYEE_INCOME
Total income subject to self employment taxes	TAXABLE_AMOUNT
Employer paid income with FICA withheld Income up to FICA_MAXIMUM is subject to FICA taxes. Your employment wages and tips should have a SOCIAL_SECURITY_CURRENT_RATE deduction for FICA from your pay, which is matched with a SOCIAL_SECURITY_CURRENT_RATE payment from your employer. If your total wages, tips and self employment income exceed FICA_MAXIMUM you only owe social security on the difference between your self employment income and FICA_MAXIMUM. If your total employment wages and tips exceeds FICA_MAXIMUM you will not owe any additional social security taxes for the year.	EMPLOYER_PAID_INCOME
Medicare tax (MEDICARE_CURRENT_RATE2)	MEDICARE_TAX
FICA tax (SOCIAL_SECURITY_CURRENT_RATE2)	FICA_TAX
Total self employment taxes	TOTAL_TAXES
Tax deductible portion	ONE_HALF_TAXES

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Definitions

Net farm income or loss

This is your net farm income or loss. This should include both the net farm profit or loss from Schedule F along with any income from farm partnerships. Please note that if your gross farm income is $2,400 or less and your net farm income is $1,733 or less there is a "Farm Optional Method" for calculating income subject to self employment taxes. If you qualify for this optional method it may produce a slightly lower income subject to self employment taxes. This calculator assumes that you will not use the "Farm Optional Method". For more information see IRS Schedule SE Part II, Optional Methods to Figure Net Earnings.

Net business income or loss

This is your net income from businesses and partnerships. These amounts are reported on IRS Schedule C for sole proprietorships and IRS Schedule K-1 for partnerships. Do not include any farm partnerships, this income should be included in the net farm income or loss.

In most cases you will need to pay Self Employment taxes on salaries received for services performed as a minister. This also includes the rental value of a home and the value of meals and lodging provided to you, your spouse and your family. Include income received for services performed as a minister in your "net business income or loss", do not include it in "Church employee income". There are a number of exceptions for ministers and members of religious orders, in regards to self employment tax liability. Please see the detailed instructions for self employment taxes as provided by the IRS to determine how these rules might apply to your specific situation.

Self employment income

This is your total income subject to self employment taxes. This is calculated by taking your total "net farm income or loss" and "net business income or loss" and multiplying it by 92.35%. This is done to adjust your net income downward by the total employment tax that would have been paid by an employer, had you not been self employed. If the result is less than $400.00, you do not owe any self employment tax on this income.

Church employee income

If you have more than $108.28 in church employee income, you will need to pay self employment taxes on that income. This does not include any income you received as a minister, which was entered above.

Net church employee income

This is your total church income subject to self employment taxes. Like your other self employment income, this total is calculated by multiplying your church employee income by 92.35%. If this amount is less than $100, you do not owe any self employment taxes on this income.

Employer paid income

Enter your total employment wages and tips that you have been paid where social security taxes have been deducted. In 2004, income up to $87,900 is subject to the 12.4% tax paid for social security portion of self employment taxes (FICA). Your employment wages and tips should have a 6.2% deduction for social security from your pay, which is matched with a 6.2% payment from your employer. If your total wages, tips and self employment income exceed $87,900 you only owe social security on the difference between your self employment income and $87,900. If your total employment wages and tips exceed $87,900 in 2004 you will not owe any additional social security taxes for the year.