Q.What is self-employment tax?
A.Self employment tax is the Social Security and Medicare tax for self-employed individuals. You are considered self-employed (and subject to self-employment tax) if you carry on a trade or business as a sole proprietor, an independent contractor, a member of a limited liability company that has elected partnership taxation, or are otherwise in business for yourself. You do not have to carry on regular full-time business activities to be self-employed. Part-time work, including work you do on the side in addition to your regular job, may also be self-employment.
You are required to pay self-employment tax if you have net earnings of $400 or more from your business or trade. Self-employment tax is paid by making quarterly estimated tax payments on Form 1040-ES (Estimated Tax for Individuals).
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