Calling All Creatives: All You Need to Know About the Self-Employment Tax

The self-employment tax is a tax paid by people who work for themselves. This also means that they  don’t have an employer withholding taxes from their paychecks year-round. The current self-employment tax rate is 15.3% (12.4% for Social Security + 2.9% for Medicare).

Am I self-employed? 

There are many job types that fall under the category of self-employed. If you are your own boss – even if it is only part-time – you could be self-employed for tax purposes.

Photo by Tachina Lee on Unsplash


Some common examples of self-employment include:

  • Hairstylist, esthetician, and other professional services
  • Teaching and childcare 
  • Freelance Creative and IT (i.e. graphic designer, writer, etc.)
  • Food and Beverage (or Hospitality) 
  • Performance Arts and Entertainment 
  • Uber Drivers/ Truck drivers 
  • Independent Retail (i.e. Rodan and Fields, Advocare, or other home-based businesses)
  • Any work on a contract basis
  • Property and Real Estate 
  • Pastors/Clergy 


Photo by Gabriel Gurrola on Unsplash

Self-employed individuals typically receive a Form 1099 at the beginning of the year that tells how much money they have earned for services they provide. You are not self-employed if you receive a W-2 from your employer, and you have no other source of income. 

Do I need to pay the self-employment tax? 

You must pay the self-employment tax if: 

  • You make more than $400 net earnings from being self-employed 
  • You are employed by a church and make more than $108.28. 

If you think you could be self-employed but you haven’t earned $400 from your work, it’s possible you have a hobby rather than a business. To qualify as a business, you must make a profit in three out of the last five years.

How do I pay the self-employment tax? 

You can pay self-employment tax in quarterly payments or in one lump sum.

What is Form 1099? 

Any income outside of a W-2 is recorded and reported through Form 1099. There are several types of 1099. Some of the most common are: 

  • 1099-MISC: Income earned without a W-2, royalties and rental income.  
  • 1099-H: Health insurance payments like advance payments of qualified health insurance. 
  • 1099-INT: Interest income.  
  • 1099-K: Merchant card and third-party network payments.  
  • 1099-Q: Qualified education programs like the 529 Coverdell Education Savings Account. 
  • 1099-R: Annuities, IRAs, retirement plans, and pensions.  
  • 1099-S: Profit from selling a home and other real estate transactions 

How do I file without a 1099? 

You should receive a Form 1099 from anyone who paid you $600 or more to perform a service. If you earned less than $600, you may not receive the form, but you are still responsible for self-employment taxes. For this reason, it is very important that you keep your own records and receipts throughout the year. Your income and expenses will be reported on a Schedule SE, and the amount of tax you owe is calculated on Schedule C 


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