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Self-Employment Tax Explained: 15.3% FICA for Freelancers
How self-employment tax works, the 92.35% multiplier, SE tax deduction, and quarterly payment tips.
July 9, 20267 min readBy MyWealthForge
Key Takeaways
- 1SE tax = 15.3% on 92.35% of net self-employment income.
- 2Covers Social Security (12.4%) and Medicare (2.9%).
- 3Additional 0.9% Medicare surtax above $200k income.
- 4Deduct half of SE tax on Form 1040.
Freelancers pay both employer and employee FICA — 15.3% on top of income tax. This surprises many new self-employed workers.
Budget for taxes in side income planning.
The Math
Net profit $80,000 × 92.35% = $73,880 taxable for SE tax. × 15.3% = $11,304 SE tax.
Deduct $5,652 (half) from income tax.
Reduce SE Tax Legally
S-Corp election pays reasonable salary (FICA) and distributions (no SE tax) — requires payroll setup.
Max SEP IRA or solo 401(k) to lower net profit.
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