Pay Social Security Taxes on Your Self Employed Net Earnings
Use Schedule SE to figure your Social Security and other tax liabilities for your net earnings of over $400 while self employed.
Work through the flowchart at the middle of Schedule SE's first page to determine if you may use Short Schedule SE. Most self employed taxpayers are able to use Short Schedule SE.
Enter any net farm profit or loss, from line 36 of Schedule F or box 14, code A of Schedule K-1, on line 1 of Section A-Short Schedule SE.
List your business net profit or loss on line 2. You will find this figure on line 31 of Schedule C, line 3 of Schedule C-EZ or either box 14, code A or box 9, code J1 of Schedule K-1.
Total your net business profit or loss by adding lines 1 and 2 and entering the sum on line 3.
Multiply line 3 by 92.35 percent to calculate your net earnings from self-employment. If the product is $400 or more, enter it on line 4. If it is below $400, you do not owe any self-employment tax and do not need to fill out or file Schedule SE.
Calculate your self-employment tax following the instructions for line 5 and enter your self-employment tax on line 5 and on Form 1040, line 58.
Deduct half of your self-employment tax from your Form 1040 income by entering 50 percent of the figure on line 5 on line 27 of Form 1040.
Follow instructions to fill our the Long Schedule SE if you are required to do so according to the flow chart in the middle of Schedule SE.
Pay the total "Tax you owe" figure on Form 1040 after following all steps above and in doing so you will be meeting your Social Security tax obligations.