How is Schedule SE different from Schedule C?
Schedule C reports business income and expenses to find your profit. Schedule SE then uses that profit to calculate your self-employment tax.
Tax guide
What Is Schedule SE?
Schedule SE is the tax form used to calculate the self-employment tax you owe on your net business profit.
Schedule SE works hand in hand with Schedule C. After Schedule C shows your net business profit, Schedule SE uses that figure to calculate the 15.3 percent self-employment tax that funds Social Security and Medicare.
The form applies the 12.4 percent Social Security portion up to an annual wage limit and the 2.9 percent Medicare portion with no cap. It also calculates the deduction for one half of your self-employment tax, which reduces your income on your main return. The resulting self-employment tax is then added to your Form 1040.
Most self-employed people with net earnings above a small threshold must file Schedule SE. It is a routine companion to Schedule C for freelancers, contractors, and small business owners.
In short
Key points
- Calculates the self-employment tax on your business profit
- Works directly from the net profit on Schedule C
- Applies the 15.3 percent rate for Social Security and Medicare
- Social Security portion is capped; the Medicare portion is not
- Figures the deduction for half of your self-employment tax
- Required for most self-employed people above a small earnings threshold
FAQ
Frequently asked questions
Does everyone with self-employment income file it?
Most do once net earnings pass a small threshold. Below that amount, self-employment tax may not apply, but the income is still reportable.
Where does the tax from Schedule SE go?
The self-employment tax it calculates is carried over and added to the total tax you owe on your Form 1040.
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