I'm self-employed. Do I still have to pay Social Security and Medicare taxes?

Yes. You pay in the form of Self-Employment Contributions Act (SECA) taxes, reported on your federal tax return. The rate is 15.3 percent of net proceeds from your business. You file a Schedule C (Form 1040) to report profit or loss from self-employment and Schedule SE (Form 1040) to calculate your Social Security and Medicare taxes.

The Social Security tax rate for 2023 is 12.4 percent on self-employment income up to $160,200. You do not pay Social Security taxes on earnings above that amount. There is no such cap for Medicare contributions; you pay the Medicare tax rate of 2.9 percent on all profits from self-employment. A portion of your SECA tax can be taken as a deduction elsewhere on your tax return.

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Keep in mind

If you hold a wage-paying job, you pay 7.65 percent of your gross income into Social Security and Medicare, via FICA payroll-tax withholding. Your employer makes a matching contribution.