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Form 1040 Schedule SE

Currently in :

Form 1040 Schedule SE

The Schedule SE Form Explained: Understanding Self-Employment Tax

Remember the phrase, "there's an app for that," Apple's ad campaign in the mid-2000s that was talking about the explosion in different kinds of apps happening at the time? One of the great things about the US economy is that it allows for so many different ways to earn an income. For each one, "there's a tax form for that." Over 60 million people in the US do freelance work, and one of the major tax forms they all need to fill out each year is the IRS Schedule SE. Let's be real, the IRS isn't known for making tax forms easy to understand, so here's everything you'll need to know when it comes time for you to use the dedicated tax form for people who are self-employed.

Table of contents

Okay, so the Schedule SE is a tax form. What is it for?...Read more

I get it, but exactly how much is the tax for freelancers?...Read more

That's a relief, but how do I calculate what I owe?...Read more

Let's take a step back, do you even have to pay self-employment tax?...Read more

Not rocket science but not a cake walk: instructions for Schedule SE filing...Read more

Let's see if we can make this easier...Read more

How can I pay my Schedule SE taxes?...Read more

Okay, so the Schedule SE is a tax form. What is it for?

The SE part of the name stands for self-employment tax, meaning this form is for people who make a living working for themselves and freelancing. This is not to be confused with the 1040 Schedule C income tax form that every small business owner should know they have to file.

For those of you who are into history, in 1954 the US Congress passed the Self-employment Contributions Act, or SECA. The idea was that people who work for themselves should have the same right to receive Social Security and Medicare benefits when they retire or get injured. SECA takes taxes from freelancers who are working, in order to fund Social Security and Medicare for freelancers who are no longer working, or who can't work anymore.

Form 8829

This form helps freelancers and self-employed individuals figure out what home office expenses they can deduct from their taxes.

Form 1099

All self-empoyed individuals and freelancers who earn more than $600 during the tax year use this form to report their income to the IRS.

Schedule SE

People who make a living working for themselves or freelancing use this form to pay Social Security and Medicare taxes.

Form 1040

This is the master tax form that every American, freelancer or not, needs to fill out after the tax year ends.

Form 1040-ES

All self-employed individuals and freelancers who expect to pay $1,000 in taxes for the year, are required to pay quarterly estimated taxes using this form.

Schedule C

If you're running a business on your own, this the form where you report how much (knock on wood) profit you made or how much you (heaven forbid) lost.

Form 8829

This form helps freelancers and self-employed individuals figure out what home office expenses they can deduct from their taxes.

Form 1099

All self-empoyed individuals and freelancers who earn more than $600 during the tax year use this form to report their income to the IRS.

Schedule SE

People who make a living working for themselves or freelancing use this form to pay Social Security and Medicare taxes.

Form 1040

This is the master tax form that every American, freelancer or not, needs to fill out after the tax year ends.

I get it, but exactly how much is the tax for freelancers?

On top of income tax, the SECA tax is 15.3% of a self-employed individual's net earnings, or the total amount they bring in. So if you were in an employer-employee situation, you would pay half of that (7.65%), and the company you work for would pay the other half. 15.3% is a significant chunk of your income, but there is some good news. The IRS is not without a heart when it comes to people who are working for themselves and don't have an employer to rely on. If you're self-employed, and you're paying the entire 15.3%, you can usually deduct half of that payment from the taxes you pay!

That's a relief, but how do I calculate what I owe?

Simple right? A couple of things you might want to keep in mind when you're filling out this tax form, also called the Schedule SE, are:

Social Security tax is levied on the total profits from your business, right? But the new cap for 2022 is $147,000. If you're fortunate enough to earn this much, you can stop paying Social Security tax.
Not the case with that 2.9% Medicare tax. It gets applied to your income no matter how much you make.

Let's take a step back, do you even have to pay self-employment tax?

There are exceptions, but for the most part, yes. If the IRS can classify you as a sole proprietor, and you make more than $400 in business income during the tax year, you're going to have to pay tax on that. But first, you'll need to know how to report that income on the Schedule SE (also known as the form 1040 Schedule SE, the form 1040 Self-Employed and the IRS Schedule SE) – which is why you're here. Whatever you call it, this is one of the main forms you'll need to fill out if you are:

A sole proprietor (someone who receives all the income their business generates)
An independent contractor, or someone offering specialized services as a nonemployee
Someone who owns a limited liability company, or LLC
A partner who owns a business together with someone else

Note: people who own S corporations and people who own shares in corporations are not considered to be self-employed, so they're exempt from paying self-employment tax.

Not rocket science but not a cake walk: instructions for Schedule SE filing

Does it take some time to follow Schedule SE instructions to the end? Yes, but they're actually not that complicated.

How many times have you heard friends and relatives offer up the cliched complaint about how difficult it is to figure out how to fill out tax forms correctly? It's virtually a rite of passage for us Americans. Next time someone complains, tell them to check the IRS' website. The instructions there are pretty detailed and straightforward – usually.

Sometimes the language can be difficult to grasp, if you're not a tax expert: "Recapture amounts under sections 179 and 280F that you included in gross income because the business use of the property dropped to 50% or less. Don’t include amounts you recaptured on the disposition of property." But many of sections on the Schedule SE tax form are for people in very specific circumstances, so they don't apply to most of us. You're also going to see lines like "Net profit or (loss) from Schedule C, line 31" that are simply self-explanatory and written directly on the form.

The IRS Schedule SE is a tool in the end, and one that the federal government wants you to be able to use, so that you can pay the taxes that keep public programmes up and running for every American. The form is there to help you figure out exactly how much you owe in self-employment taxes, and yet it can be difficult to know what you need to fill out on the form, and what you don't.

Let's see if we can make this easier

The IRS, try as it might, isn't exactly known for simplicity, and it can always improve on its instructions. Check out the barebones guide below on how to fill out Schedule SE, so you don't lose your patience or your money. FYI, if you're self-employed or an independent contractor, or you received any 1099 income during the tax year, you'll need to fill out the Form 1040 first. This helps you get a figure for your net taxable income. The 1040 SE form is dependent on that number.

Enter your profit or (perish the thought) your loss on Line 2. You can get this from your Schedule C
On Line 3, add all the lines above it together
Line 4 is where you do the math to know what you owe in taxes. Just multiply Line 3 by .9235, or 92.35% to know how much you'll owe in taxes
The next few lines, 5a-8d, are a handful of income types that not a lot of people have, and you probably won't need to worry about.
Lines 10 and Line 11 are probably the most important on your self-employment tax form, because this is where you calculate some of the most significant parts of the payment you'll have to make: Social Security and Medicare
Line 12 is where you enter your total self-employment tax, which you get by adding lines 10 and 11 together
Another very important part of your self-employed tax form is Line 13. It's where you deduct half of your self-employment tax from what you owe. Multiply line 12 by 50%, or .50, then enter the result here

How can I pay my Schedule SE taxes?

Filing your taxes is the hard part of the process. Paying your taxes, you may not be surprised to learn, is the easy part. The IRS has a payment system set up on its website. Before you get to that point, there are some things to know about making the payment deadline and putting your mind at ease knowing you didn't overpay. The room for error is biggest when you file your taxes yourself. A tax professional at a traditional brick-and-mortar tax firm can help remove that uncertainty by calculating your taxes for you and filing them on your behalf. In most cases, this is the most expensive option. A subscription to one of the tax filing apps that are on the market costs less, but you still need to keep track of all your expenses on your own and be careful not to miss a possible deduction. FlyFin is the No. 1 A.I.-driven tax machine for freelancers, analyzing your business expenses automatically to find every possible deduction, so you never overpay on self-employment tax. It's backed by a team of tax professionals who are there for you, to answer questions in real time and file your taxes when the time comes.

Quick tip

Most freelancers and self-employed people will only fill out Part I of Schedule SE. To find out if filling out Part II could benefit you, it's best to consult a tax professional.

What’s FlyFin?

FlyFin caters to the tax needs of freelancers, gig workers, independent contractors and sole proprietors. But anyone can file taxes through FlyFin! FlyFin tracks all your business expenses automatically using A.I. technology. Then, our CPA team files a guaranteed 100% accurate tax return for you – to save you a couple thousand dollars and a ton of time on your taxes. In addition, you can download the FlyFin app and have your taxes filed in less than fifteen minutes, saving time and money.

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FlyFin is an A.I.-powered tax engine designed for freelancers to make taxes effortless. Right from finding tax write-offs to filing your taxes in just 5 mins, FlyFin is the only app you need. A.I. scans all your expenses and finds all tax deductions that apply to you. If you’re unsure about an expense, you can seek unlimited help from the CPAs.

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Simple: There seems to be quite a lot of confusion with regards to the self employed tax. FlyFin is here to bridge the gap between freelancers and the tax policies set by the IRS.

Effortless: FlyFin is the world’s first A.I. tax engine for freelancers, it is easy to set up and absolutely free effortless to use.

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Moreover, FlyFin notifies you about important ongoing deductions, recommendations on how to take self-employment tax deductions, and any other critical IRS tax payments reminders such as quarterly taxes due time or changes in the tax code.

CPA Assistance

Can I claim the home office deduction? Travel, Rent, and Mileage deductions? Artificial Intelligence and our expert tax CPAs work together to help you maximize your freelance tax deductions. You ask a question, and our tax CPAs will respond within 24 hours.

FlyFin is powered by A.I. and backed by CPAs to provide you with an accurate tax review. File your 1099 form with the help of FlyFin’s expert CPA team and deduct all your business expenses, such as home office expenses, and you can claim office equipment tax deductions as well.

Our expert team of CPAs is well-versed in all aspects of US & International taxes. They ensure 100% accurate tax review and preparation.

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