Is Self employment tax included in the normal federal income tax bracket for the self employed or is it separate?
Self-employment tax is separate from income tax. Self-employment tax is actually the Social Security and Medicare taxes on self-employment income. The tax rate for Social Security is 12.4%. The tax rate for Medicare is 2.9%. When you are employed by another person, one-half of your Social Security and Medicare taxes are withheld from your gross wages. The other half is paid by your employer. When you are self-employed, you are both the employee and the employer, and must pay 100% of the Social Security and Medicare taxes due on your self-employment income. These taxes often come as a major shock to the newly self-employed. SE income is usually calculated on Form 1040 Schedule C. SE tax is calculated on Form 1040 Schedule SE. More information: http://www.irs.gov/businesses/small/article/0,,id=98846,00.html