Ask Social Security Questions and Get Answers ASAP
Self-employment tax is a tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves.
If you are being a consultant as a self employed individual then yes you would be subject to Social Security and Medicare tax on the net income.
You usually must pay self-employment tax if you had net earnings from self-employment of $400 or more. Generally, the amount subject to self-employment tax is 92.35% of your net earnings from self-employment. You calculate net earnings by subtracting ordinary and necessary trade or business expenses from the gross income you derived from your trade or business. You can be liable for paying self-employment tax even if you currently receive social security benefits.
Compute self-employment tax on Form 1040, Schedule SE (PDF). When figuring your adjusted gross income on Form 1040, you can deduct one-half of the self-employment tax. You calculate this deduction on Schedule SE.
Please do not forget or ignore to give a positive rating (look for the STARS or SMILEY FACES). It adds nothing to your costs but it assists me.
Hi Angela, just checking back to see if you responded or needed clarification after you read my answer to your post.