Self-Employment Tax Advice
There are a lot of great tax benefits when you own a small business. However, you’re also subject to certain taxes, like self-employment tax. This tax is a way for government agencies to collect tax on your earnings, just as if you were an employee. As a benefit of using H&R Block Online Premium, we calculate your self-employment tax and deduction for you. You won’t have to figure any of this out on your own.The current self-employment tax rate is 15.3%. Fortunately, there are several ways this tax is reduced:
- You can deduct half of your self-employment tax.
- Your self-employment income is multiplied by 0.9235 before the tax rate is applied.
- Any self-employment income you earn that’s more than $117,000 is taxed at 2.9%. This is instead of the higher, 15.3% rate.
- If you also worked as an employee, you get a credit for any Social Security tax withheld from your wages.