How does the self employment tax work?

    Published: 06-16-2009
    Views: 11,097
    Goodman & Company Tax Director Art Auerbach explains how tax on self employment pays into Social Security.

    Host: How does the self-employment tax work?

    Aurthur Auerbach: Self-employment tax is how a self-employed individual pays in into the Social Security System. If you have a profit and the net result of net income on your Schedule C that number carries to form 1040 SE for self-employed, you calculate there the amount of contribution, you write that check, you pay that in addition to your normal income tax and that is how you build your credits as a self-employed individual to the Social Security System. It's pretty simple, profit on Schedule C, carry that number to 1040 SE, if you are using a tax program and you have bought one of the commercial programs, they should automatically do this for you.