Self-employment tax is a social security and Medicare tax primarily for individuals who work for themselves. Your payments of self-employment tax contribute to your coverage under the social security system. Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits.
You must pay self-employment tax and file Schedule SE (Form 1040) if either of the following applies.
1) Your net earnings from self-employment were $400 or more.
2) You had church employee income of $108.28 or more.
Use Schedule SE (Form 1040) (pdf) to figure your self-employment tax.
|You can deduct one-half of your self-employment tax as an adjustment to income on your Form 1040.|
The Social Security Administration (SSA) time limit for posting self-employment
Generally, the SSA will give you credit only for self-employment income reported on a tax return filed within 3 years, 3 months, and 15 days after the tax year you earned the income. If you file your tax return or report a change in your self-employment income after this time limit, the SSA may change its records, but only to remove or reduce the amount. The SSA will not change its records to increase your self-employment income.
Information courtesy of the Internal Revenue Service.