What is Self-Employment Tax?
Self-Employment Tax is a tax that individuals who work for themselves must pay to cover Social Security and Medicare contributions. Unlike traditional employees whose employers share the cost of these taxes, self-employed individuals are responsible for paying the full amount themselves. This tax ensures that self-employed workers contribute to the same government programs that provide benefits for retirement, disability, and healthcare. It is calculated as a percentage of the individual’s net earnings from self-employment.
How HR teams use this term
HR teams usually use Self-Employment Tax when they write policies, explain employee communication, review payroll or leave records, or keep employee data clean in an HRMS.
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