Write the annual salary you are anticipating as an independent contractor. This is the base number upon which you will calculate self-employment tax owed.
Deduct 7.65 percent from this figure. The Internal Revenue Service (IRS) allows you to deduct 7.65 percent as if you are your own employer. Thus, deduct this percentage from a hypothetical salary of $100,000. The formula is $100,000 minus $7,650 (7.65 percent of $100,000). The result is $92,350; thus, calculate self-employment tax on this figure.
Calculate the self-employment tax you will owe. Self-employment is the combination of 6.2 percent of Social Security tax and 1.45 percent of Medicare tax, for a combined 7.65 percent. The independent contractor pays both the employer and employee portion for a combined tax of 15.3 percent. Thus, the formula in this example is $92,350 multiplied by 15.3 percent equals $14,130. This is the total self-employment tax on annual earnings of $100,000. Note that this is self-employment tax. In addition, federal income tax will be owed on the $100,000 earnings.