self-employment tax, let's say I make $50k this year...?

Question

Besides the $10,000ish in income, will I have to pay self-employment tax on top of that? I live in Washington State.

Answer 1

If any of your income is self employment income, then on that income you have to pay 15.3% self-employment tax.
If any income is unearned income, on the earned income you don't pay self-employment tax.
On earned income (for example, income from job), the employer withholds 7.65% tax for social security and medicare (half of self-employment tax).

Let us assume:
50K from self-employment,
10K from unearned income (interest, dividends, short term gains, winnings),
you are Single and no dependent
then your total taxes will be as under:

Self employment tax 50K x 15.3% = $7,650.
Net taxable income = 60K minus ($5,350 standard deduction, plus $3,400 exemption + $3825 half of SE tax) = $47,425.
Federal tax on $47,425 is $8,280.
Total of SE + Fed tax = $15,930.
On the top of this amount, you have to pay Washington State tax.

Answer 2

Income is adjusted so that self-employment tax is about the same as social security and medicare tax on the same income. An employee pays half of social security and medicare tax and the employer pays the other half. A self employed person is, well, the employer and pays both halves. On $50,000 the computation is $50,000 x 92.35% x 15.3% = $7064.78

Answer 3

You are saying that your gross would be $50K but most of it, around $40K would be expenses, that your net would only be $10K? Then your self-employment tax would be figured on the $10K. You pay tax on your net, not gross, income.

Warning - if some of those items were for purchases of expensive items that are used in your business, you might have to depreciate them rather than deduct the whole cost in the year of the purchase. Your accountant can advise you on that - with that much self-employment income and expenses, I assume that you have one - if you don't, you probably should unless you are very knowledgeable about accounting and taxes.

Answer 4

The self-employment tax rate is 15.3% in the US. That on top of other income taxes... so 1760 in self employment taxes, sucks i know :p