Self-Employment Tax Expense

  • Owners of businesses organized other than as a corporation are not employees of their businesses. As such, they are personally responsible for paying Social Security and Medicare taxes (called “Self-employment tax.”)
  • Owners of unincorporated businesses pay self-employment tax on NET earnings from self-employment.
  • ½ of Self Employment tax is deductible as an adjustment to gross income on your personal tax returns.

For tax purposes, self-employment tax is computed on Form SE and is recorded on Schedule C and Form 1040.