How to Fill Out Schedule SE for Self-Employment Tax
A comprehensive guide to Schedule SE, helping self-employed individuals accurately calculate and report their Social Security and Medicare taxes.
Schedule SE (Form 1040) calculates Social Security and Medicare taxes for self-employed individuals and partners. These taxes are collectively referred to as self-employment taxes, ensuring that those who do not have these taxes withheld from a paycheck, like traditional employees, still contribute to these federal programs. The form determines the amount of these contributions based on net earnings from self-employment.
Gathering Your Information
Gather all financial records related to your self-employment activities before completing Schedule SE. The primary document for many individuals will be Schedule C (Form 1040), “Profit or Loss From Business,” which details the net profit or loss from a sole proprietorship or single-member limited liability company. For those involved in farming, Schedule F (Form 1040), “Profit or Loss From Farming,” will serve a similar function. If you are a partner in a business, your share of the partnership’s income or loss will typically be reported on Schedule K-1 (Form 1065), “Partner’s Share of Income, Deductions, Credits, etc.”
These schedules consolidate your business income and expenses to arrive at a net profit or loss, which is the foundational figure for self-employment tax calculations. Any other self-employment income not reported on Schedule C or F, such as freelance earnings, must also be included. Having these documents prepared ensures that all your self-employment earnings, which are subject to Social Security and Medicare taxes, are accurately accounted for. This step helps determine the taxable earnings on Schedule SE.
Calculating Your Net Earnings
Calculating your net earnings for self-employment tax begins in Part I of Schedule SE. Transfer your net profit or loss from Schedule C, Line 31, or Schedule K-1, Box 14, Code A, to Schedule SE, Line 2. For farming income, net farm profit or loss from Schedule F, Line 34, is entered on Schedule SE, Line 1a. These lines aggregate all your self-employment income for the tax year.
Once your total self-employment income is entered, calculate your net earnings from self-employment by multiplying that amount by 92.35% (0.9235). This calculation is performed on Schedule SE, Line 4a. The 92.35% factor accounts for the fact that self-employed individuals can deduct one-half of their self-employment tax when computing their adjusted gross income for income tax purposes, making the effective taxable base less than 100% of net earnings. The result on Line 4a represents the portion of your self-employment income subject to Social Security and Medicare taxes. This figure is carried forward to Line 6 of Schedule SE.
Determining Your Self-Employment Tax
After calculating your net earnings from self-employment, determine the self-employment tax owed in Part II of Schedule SE. This section applies Social Security and Medicare tax rates to your adjusted net earnings. The Social Security tax rate is 12.4%, and the Medicare tax rate is 2.9%, for a combined self-employment tax rate of 15.3%.
The Social Security earnings limit is a key consideration. For 2025, the maximum earnings subject to Social Security tax is $176,100. You pay the 12.4% Social Security portion on net earnings up to this threshold. However, the 2.9% Medicare tax applies to all your net earnings from self-employment, with no income limit.
If you also had wages from an employer, you will enter your Social Security wages from Form W-2 on Schedule SE, Line 8a, to ensure you do not overpay Social Security tax. The form guides you through calculating the Social Security tax on Line 9 and Line 10, considering the earnings limit and any prior Social Security wages. The Medicare tax is calculated on Line 11. The total self-employment tax is determined by adding the Social Security tax from Line 10 and the Medicare tax from Line 11, with the sum reported on Schedule SE, Line 12.
What Happens After Completing Schedule SE
The calculated self-employment tax from Schedule SE, Line 12, is transferred to Form 1040, Schedule 2, Line 4. Schedule 2 reports additional taxes not included on the main Form 1040. This ensures the self-employment tax is added to your overall tax liability.
You are entitled to a deduction for one-half of your self-employment tax. This deduction is calculated on Schedule SE, Line 13, by multiplying your total self-employment tax by 50%. This deductible amount is reported on Form 1040, Schedule 1, Line 15, reducing your adjusted gross income.
For self-employed individuals, it is also important to consider making estimated tax payments using Form 1040-ES throughout the year. Since self-employment tax is not withheld, quarterly payments help avoid potential penalties for underpayment of tax.