Schedule SE: A Simple Guide to Filing the Self-Employment Tax Form

By

Nick Zaryzcki

-

Reviewed by

Derek Watson, EA

on

December 13, 2022

This article is Tax Professional approved

Group

If you’re self-employed, you have to pay self-employment tax to the IRS. And to do that, you need to file Schedule SE.

How exactly does the IRS classify "self-employment" income? Who needs to file Schedule SE?

Here’s what you need to know.

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What is Schedule SE?

Individuals use IRS Schedule SE to figure out how much self-employment tax they owe.

Schedule SE is one of many schedules of Form 1040, the form you use to file your individual income tax return. You use it to calculate your total self-employment tax, which you must report on another schedule of Form 1040—Schedule 2 (Part II, line 4).

Self-employment tax is a combination of your Social Security and Medicare tax—similar to the taxes withheld from your paycheck when you work for someone else.

In general, self-employed individuals must pay both self-employment tax and income tax.

Further reading: Sole Proprietorship Taxes (A Simple Guide)

Who needs to file Schedule SE?

If you made $400 or more this year in self-employment income, you must report your self-employment income to the IRS using Schedule SE. Exception: File if church employee income is $108.28 or more.

What is self-employment income?

Self-employment income is income you earn for yourself. The IRS says you’re “self-employed” if you do business as a sole proprietor, an independent contractor, as a member of a partnership, or if you work for yourself in any other way (including operating a part-time business).

If you’re unsure what any of those terms mean, visit the IRS’s Self Employed Individuals Tax Center for more information.

Where do I find my self-employment income?

Before you file Schedule SE, you must first calculate your total self-employment income (or loss).

When you’re doing your taxes, you’ll calculate your total self-employment income in one of four places:

Schedule C (line 31)

If you run a sole proprietorship or performed work as an independent contractor, you’ll use Schedule C to calculate your total self-employment income (or loss). On Schedule C, total self-employment income is recorded on line 31.

Schedule K-1 (line 14a)

If you’re a member of a partnership, you’ll use Schedule K-1 of Form 1065 to determine your share of the partnership’s income or loss and record it on line 14a. In general, this income is subject to self-employment tax.

Schedule F (line 34)

Farmers use Schedule F of Form 1040 to calculate total farming income (or losses), which is recorded on line 34.

What does Schedule SE look like?

Schedule SE is a two-part form from the IRS, the first page of which looks like this:

2022 Schedule SE

How to fill out Schedule SE

In years past, Schedule SE had a long and short version but this is no longer the case. Now, Schedule SE consists of two parts. Most self-employed individuals will only fill out Part I. Part II contains two optional methods that you must meet certain criteria to use.

Part I: "Self-employment tax"

Lines 1a and b are special lines about farming income that you don’t have to worry about unless you’re a farmer.

Lines 2-4c will ask you to take your total net self-employment income and multiply it by 92.35% to calculate your “net earnings,” which is the part of your income that is subject to self-employment tax. Take the final amount recorded in line 4c and enter it in line 6 (unless you also have income as a church employee and received a Form W-2).

Line 7 states the maximum amount you can pay Social Security tax on, $142,800. This will be used for calculations in Lines 9-10.

Lines 8a-d are where you’ll record any earnings from a job you already paid Social Security tax on (like wages or salary). You can find this information on the Form W-2s your employer provided you.

Lines 9-10 calculates how much Social Security tax you owe.

Line 11 calculates how much Medicare tax you owe.

Line 12 combines the amounts found in Line 10 and Line 11 for the total self-employment tax amount.

Line 13 will prompt you to multiply whatever your self-employment tax is by 50%. You can claim the resulting amount on yet another schedule of Form 1040—Schedule 1.

Part II: "Optional methods to figure net earnings"

You can use this section to elect what the IRS calls one of the “optional methods,” which might give you credit toward your social security coverage even if your income from self-employment was very small (less than $6,367) or a loss. Also, it may increase certain tax credits like the earned income credit or child and dependent care credit. Before electing one of the optional methods, make sure to talk to a tax professional.

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Can I deduct self-employment tax? And if so, how much?

You can deduct 50% of self-employment tax, because the IRS considers the employer portion of the self-employment tax to be a deductible expense.

Regardless of whether you’re itemizing your deductions or taking the standard deduction, you can claim the deductions you calculated above on line 12a of Form 1040.

What if I run multiple businesses?

If you have more than one source of self-employment income, combine the income (or losses) from all sources and complete only one Schedule SE.

What if I’m also an employee and get a regular salary?

If you made self-employment income but also worked for someone else, you need to remember two things:

  1. To make sure you don’t pay more self-employment tax than you need to, use Long Schedule SE.
  2. When filling out Long Schedule SE, make sure to add the total amounts from line 3 (Social security wages) and line 7 (Social security tips) from your W-2 on line 8a of Long Schedule SE.

A free self-employment tax calculator

If you need help totaling your tax liability, walk through our free self-employment tax calculator. Enter your info, and we’ll tell you what you owe.

START CALCULATING

This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein.
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