A Social Security and Medicare tax for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. The self-employment tax
consists of two parts: 12.4 percent for Social Security and 2.9 percent for Medicare (hospital insurance) on income up to $110,100. However, the temporary payroll tax cut for tax years 2011 and 2012 reduced self-employment tax by 2 percent. You can deduct the employer-equivalent portion of your self-employment tax in figuring your adjusted gross income. This deduction only affects your income tax. It does not affect either your net earnings from self-employment or your self-employment tax.
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