What would you like to do?

Why do you pay 30 percent in self-employment tax but when you were employed by a company you only paid 16 percent?

already exists.

Would you like to merge this question into it?

already exists as an alternate of this question.

Would you like to make it the primary and merge this question into it?

exists and is an alternate of .

Tax Answer Self-employmened people have to pay basically double of what a "regular" employee would pay. Here's why: When you work for someone else, the company pays half of the social security, etc. taxes. However, when you work for yourself, you are essentially the employee AND the employer; thus, the 30% income tax. It truly isn't fair, especially for small businesses or independent contractors, but that's the tax law. Right idea...the self emplployment tax means you pay the tax the employer normally would. That is the 7.65% of the total 15.30% FICA, etc. that the employer would pay. So where the percentages your coming up with are derived I have no idea. True, there are different caps on amounts that are FICA, etc., taxable....and different considerations about what is taxable income (401K contributions, etc.), so you can't just take your total earnings and divide by your FICA contribution, but even so, for most people it still should be close to that 15% ---- And I absolutely believe this is a fair rule...the tax is 15.30 for SS/FICA and the health component on the applicable earnings, maxed at around 93K of earnings....it is an insurance benefit covering the worker - should the premium make any difference if it's split between employee and an employer or just by the self employed person? Each gets the same benefit paid to them at the end - or perhaps the self employed only deserve half of the normal social security paynebts on retirement? Are you suggesting one should have to contribute less...because they work for themselves? These frequently are the same people with no retirement plan of their own...(everything back into the business), except for the earnings from it they skim. Note self employeds normally don't have to pay, (or have paid for them by the employer - which as part of payroll expense just means the employer gives the employee less to compensate), Unemployment and other things like that, so they still pay less than employees. BUT REMEMBER SELF EMPLOYMENT TAX IS 7.65%....anything else requires a review.
12 people found this useful
Thanks for the feedback!

How do you pay your income tax if you are self-employed?

9.3 Estimated Tax: Individuals How do I know if I have to file quarterly individual estimated tax payments? Estimated tax payments can be used to pay Federal income tax, self-

Do you pay both income tax and self employment tax because you are self employed?

Yes. The "self-employment tax" is actually the Social Security and Medicare tax. If you work for someone else, you would have Social Security and Medicare tax taken out of

Can you deduct lost wages on your taxes due to an on the job accident and workers comp only paid you 60 percent of your normal pay?

No. You cannot deduct lost income when you never claim the actual  income in the first place. You are only taxed on the amount of  taxable income that you received. The reas

Abe makes 275.00 a week in a state where he pays 4.5 percent state income tax What will his net pay be after taxes are paid?

Abe should get this information from the employer payroll department as they will be the one that would know how much FICA, federal income tax, state income, local taxes, etc

How much percent in tax you pay?

After your income tax return is completed correctly you will know what your marginal tax rate was for your taxable income for the year. The federal income tax rate on your tax

What is 30 percent of 16?

Here's how you solve this: translate the question into math terms. "what" is an unknown value, so make it x, a variable. "is" is =. you convert 30% (30 out of 100) into a dec