Self employment tax calculator
Find self-employed taxes and deductions using A.I
Self employment tax calculator
Find self-employed taxes and deductions using A.I
Add freelance income
I also have W2 income
Add your deductions (deductible business expense)
Help me find my deductions
I’ll guesstimate for now (will get help later)
What Makes Self-Employment Taxes So Important?
It can be a challenge to save money for a new car or a dream vacation, let alone for retirement or a child's education. It can feel even more difficult to save money to pay your taxes, but for self-employed individuals, it's just as important as any of those other reasons we just listed.
That's because if you don't save enough to upgrade your ride, you can simply keep the car you have. But if you're unable to pay your self-employment taxes when it's time, you could be faced with some penalties from the IRS.
We take it this way – the IRS has penalties so taxpayers can understand the urgency and pay their taxes on time. But the IRS will not tell you how much you owe, especially if you are self-employed, and you’ll need to calculate your self-employment tax on your own. Sound like a big task in 2023?
Well, it kind of is. Self-employed individuals pay Social Security and Medicare taxes along with the regular income taxes. This is where a self-employment tax calculator can really save the day, but more on that later.
Key takeaways:
- 1099 taxes cover Social Security and Medicare
- Deductions can go a long way to lowering the amount you pay
- A self-employed tax calculator factors in your income and finds your tax amount more accurately
Table of contents
Why is self-employment tax so high?...Read more
How do I pay myself from my LLC?...Read more
Back to self-employment tax...Read more
What about SECA tax?...Read more
How much is self-employment tax?...Read more
What is the Social Security tax and for the self-employed?...Read more
Do you get Social Security and Medicare tax back?...Read more
Is there a separate California Medicare tax?...Read more
Why am I paying Medicare tax?...Read more
More on deductions and how they lower self-employment tax...Read more
Can I use a self-employment tax calculator?...Read more
Does Social Security affect self-employed retirement plans?...Read more
How much is taken out of Social Security for Medicare?...Read more
Can I find my 401(k) with my Social Security Number (SSN)?...Read more
Why is self-employment tax so high?
When you're self-employed, it might feel like your tax bill is huge at the end of the year, but in reality, there's every possibility that you can end up paying less in tax than if you were an employee of a company and received a W-2 at the end of the year.
It's easy to see why when you look at the hundreds of tax deductions available to freelancers, independent contractors and self-employed individuals. As a freelancer, you can easily factor in tax write-offs to estimate your self-employment taxes to pay the right amount to the IRS.
Employees for any corporation have taxes automatically deducted from their paychecks every two weeks. If you're a salaried employee in Wisconsin making $80,000 a year and filing a tax return as a single person, you would pay about $10,350 in federal income tax and $5,600 in state taxes. It matters which tax bracket you fall into, and you can find out with a federal tax rate calculator.
Still, if you're a self-employed software developer or rideshare driver, for example, making $80,000 in Wisconsin, you could write off part of your rent as a home office expense or part of your gas and car insurance as business expenses. The IRS recently raised the 2023 standard mileage deduction so you can write off the business portion of your vehicle mileage.
You can check the latest standard mileage rates if you drive for business purposes and also see the difference between itemizing your vehicle expenses or going for the standard mileage deduction method.
If you’re a self-employed dentist and have a patient checkup and dental treatment facility at your home, you can claim a number of deductions. These include the cost of equipment like lights, tools for examining patients, work benches, chairs for the waiting area and decoration items in the waiting area.
You can also claim a subscription to Netflix and the cost of a TV you use to entertain your patients. With these and the many other deductions you can take, you could end up paying less than the salaried employee. You just need to know how you’ll need to pay in SE taxes and how to use a self-employment tax estimator.
A tax estimator can be useful when calculating your owed Medicare and Social Security from 1099 income for 2023. Self-employed Social Security tax makes up a big chunk of your earnings, so it's a good idea to calculate this as accurately as possible.
How do I pay myself from my LLC?
If you’re a small business owner operating as an LLC, you might need to pay SE tax, depending on whether or not you’re taxed as a pass-through entity. You can pay yourself through an “owner’s draw,” which means you can transfer some of the business’ income to yourself as a salary.
Can I transfer money from an LLC to a personal account? You can, but you will need to keep proper documentation of these transactions to avoid triggering an IRS audit.
Back to self-employment tax
People who work for themselves and receive a 1099 form pay tax on the income they owe, but they also pay self-employment tax. Now, exactly what is self-employment tax? These are taxes that everyone who has income needs to pay, whether they work for an employee or for themselves.
Technically, they're called FICA (Federal Insurance Contributions Act) taxes, but self-employed people are referred to as self-employment taxes. FICA taxes pay for a couple of the most important national insurance programs Americans have to rely on: Social Security and Medicare.
A Social Security tax calculator can help you find your owed amount. Similarly, a Medicare tax calculator can help you navigate your Medicare taxes. For 2022 (and 2023), 1099 workers have to pay 12.4% for Social Security taxes. The Medicare tax rate for 2022 (and 2023) is 2.9%.
What about SECA tax?
It can be easy to get confused about the different taxes self-employed people have to pay because some have more than one name. Self-employment taxes even have a third name we don't hear as often. SECA taxes are just another name for FICA taxes but for self-employed individuals.
The IRS often uses it because it is a federal act, the Self-Employed Contributions Act (passed in 1954), aka SECA tax, that requires self-employed people to pay these taxes. You might also see SE tax used sometimes, an abbreviation for self-employment tax. To clear the air, these are just synonyms of the same self-employment tax. It can also be called 1099 tax.
How much is self-employment tax?
It might feel better to know that if you must pay a federal self-employment tax, at least it funds programs that provide income and health insurance to people who need it. That includes your friends and family who are aging out of the workforce or who get injured and are unable to work.
We hope that time never comes, but SECA can also support you if the going ever gets tough. But right now, it might be more important to know the actual numbers and how to calculate or estimate your self-employment taxes. The total self-employment or SECA tax rate is 15.3%.
Rewinding back to our $80K example – working as a software developer or rideshare driver – you would owe $12,240 in SE tax. Before you get sticker shock, remember you can write off many business expenses (maybe more than you think) to lower that number by a lot. In fact, the IRS is not without a heart in that they let self-employed people write off half the amount of their self-employment tax from their taxable income.
Is there a separate California Medicare tax?
In California, there's often some confusion around the term "California Medicare tax" because it's not a standalone tax like the federal Medicare tax. Instead, California has a “Medi-Cal” program which provides healthcare coverage to eligible low-income residents.
Why am I paying Medicare tax?
Medicare taxes are used to cover your medical expenses once you retire. While the coverage you get will depend on the type of Medicare plan you choose, most of your hospital visits and prescription drugs will be covered by Medicare. It’s important that you do enough research about all the different Medicare plans before you pick the best fit for you. A Medicare tax calculator can help you total how much of your earned income goes towards these expenses.
More on deductions and how they lower self-employment tax
You may own a business making and selling your own clothing line or a line of nutritional supplements, and you're a single-filer. All of your sales are processed using third-party apps like Venmo and PayPal, and at the end of the year, you receive a 1099-K form, which reports those sales to the IRS and you.
Sometimes, you might not receive a 1099-K when finding your estimated self-employment income. This could be because the company sending this form didn’t do it, or your 1099 form just got lost somewhere during delivery.
You can simply check your bank statements and find all the income from the third-party apps to correctly find your estimated self-employment tax liability. Or you can also use FlyFin and automate your deduction-finding task with A.I. You can also reach out to the company, letting them know you haven’t received a 1099 form or got a form with an error.
Addressing errors in 1099 forms is important because they can easily end up in your tax return, making it less accurate, which may lead to penalties. 1099 forms are the most important part of your tax return because they show your entire income, which gets reported on your 1040 form, the tax form that every American with an income has to file with the IRS each year.
If you’re already retired, you will still need the 1099 form you’ll receive for Social Security benefits when you file your taxes. Form SSA-1099 will be sent to you by mid-February at the latest, so you should contact the SSA (Social Security Administration) if you haven’t received yours on time.
So, what can you write off on taxes when you’re self-employed? When you work out of a home office, a portion of your rent can be written off from your taxable income. And, if you use software to keep track of your sales or spend money on marketing in the form of online ads, all of these are tax-deductible.
You can also write off part of your phone and internet bill because you use a percentage for your business. You meet vendors over lunch once or twice a month, too, and these meals are deductible, plus the office supplies you use … well, you get the picture.
The list goes on, and all these write-offs get subtracted from your income, meaning there's less income you need to pay tax on. If all those deductible business expenses add up to $15,000 for the year, self-employment tax only gets applied to $65,000 ($80,000-$15,000). Plus, half of the self-employment tax you would pay can be written off your taxes, too.
Keeping track of all your business expenses so you don't miss a single tax write-off is, of course, the goal if you want to pay as little as possible in taxes. But it's not always easy to use spreadsheets and save all your receipts throughout the year. That's why FlyFin exists. An app automatically tracking all of your business expenses can be a game-changer. A.I. finds every possible tax write-off. You can then also find the correct self-employment tax estimate.
Can I use a self-employment tax calculator?
The short answer? Yes, you can use a self-employed tax estimator or calculator. The long answer? You absolutely should use a self-employed tax calculator. It's by far the easiest way to know how much you will need to pay the IRS when tax time is here, and it can give you a self-employment tax estimate.
When you're self-employed, you've got more to worry about than W-2 employees do. Don't add figuring out how to calculate self-employment tax on your own to it. Use a tax estimator for self-employed people, like the one you have on this page. A self-employed calculator helps you practice finding your tax amount before you deal with the real thing. It’s much easier to get into your tax filing groove and check your estimated taxes by entering your income and deductions.
Even tools like a Social Security tax calculator can be useful when paying self-employment taxes. You are much less likely to make mistakes on your actual tax return when the tax season comes around.
Having a better understanding of the amount you need to set aside to pay your quarterly taxes is also helpful. A lot of people struggle with setting aside the correct amount and often end up either underpaying or overpaying their taxes. You can find all sorts of reliable calculators to help with taxes. Knowing the Social Security and Medicare tax rate for 2023 can also help with this.
Need a quarterly estimated tax calculator, a federal income tax calculator for self-employed or even a mortgage payment calculator? They're out there, and if you choose the right ones, you can use them to get reliable information to make the best tax decisions possible.
Figuring out how to calculate taxes for self-employed people is a lot of work, and a handy tax calculator can take some of the guesswork out. And when you use a self-employed tax calculator to find out how much tax you're likely to owe, you're one step closer to avoiding late fees or underpayment penalties.
Frequently asked questions
FAQs
How do I calculate my self-employed tax?
How much should I set aside for self-employment taxes?
How do I get the biggest tax refund when self-employed?
How do I avoid paying tax when self-employed?
Is being self-employed worth it for taxes?
How do I pay myself as self-employed?
Should I pay myself a salary from my LLC?
How do I file taxes if I am self-employed and paid in cash?
How do I show proof of income if I’m self-employed and paid in cash?
What accounts can the IRS not touch?
How much cash can you make without reporting to the IRS?
What’s FlyFin?
FlyFin caters to the tax needs of gig workers, freelancers, independent contractors and sole proprietors. This tax tool is especially helpful for gig workers, who don't have tax support from an employer like W-2 employees do.
FlyFin tracks all your business expenses using A.I. to find every possible tax deduction. You can also consult our expert CPA team to file a guaranteed 100% accurate tax return. It saves you a couple of thousand dollars and a ton of time on your taxes.
Download the FlyFin app and have your 1099 taxes filed in less than fifteen minutes, saving you time and more money on your taxes than last year, guaranteed.
Expert tax CPAs ensure 100%-accurate tax filing
A.I. finds every tax deduction, eliminating 95% of your work
On average users save $3,700
