Self-Employment Tax Calculator

Self-employment tax is a 15.3% tax on 92.35% of net self-employment earnings, comprising 12.4% Social Security (up to $168,600) and 2.9% Medicare. Self-employed individuals pay both the employee and employer portions. 50% of SE tax is deductible from adjusted gross income.

Through quarterly estimated tax payments (Form 1040-ES) due April 15, June 15, September 15, and January 15. Underpayment may trigger a penalty. Calculate each quarter based on expected annual income or use the prior-year safe harbor method.

Home office (actual cost or $5/sq ft up to 300 sq ft), vehicle mileage (67 cents/mile for 2024), health insurance premiums (deductible from AGI not SE tax), equipment, software, professional development, business meals (50%), internet and phone (business portion).

Section 199A allows eligible self-employed individuals to deduct up to 20% of qualified business income from taxable income. Phase-outs apply for service businesses above income thresholds. This deduction does not reduce SE tax, only income tax. Available through 2025 unless extended by Congress.

An S-Corp allows the owner to split income between salary (subject to SE tax) and distributions (not subject to SE tax). This can save thousands for high earners, but involves added complexity and cost (payroll, separate corporate filing, reasonable compensation requirement). Worth considering above $60,000-$80,000 net profit.

Income tax (20% basic, 40% higher rate, 45% additional rate, minus the 12,570 personal allowance), Class 2 National Insurance (3.45 per week if profits exceed 12,570), and Class 4 National Insurance (6% on profits 12,570 to 50,270, 2% above). Total tax burden is broadly similar to employment but with full employer NI savings.

Through Self Assessment: register with HMRC by October 5 following the first year of trading, file online by January 31, pay tax by January 31 (including first Payment on Account) and July 31 (second Payment on Account). Payment on Account is 50% of prior year tax liability paid twice in advance.

Allowable business expenses reduce taxable profit: home working allowance (6 per week flat rate or actual cost), vehicle costs (simplified mileage rates: 45p per mile first 10,000 miles), equipment, professional subscriptions, business insurance, accountancy fees, marketing and advertising.

A limited company pays corporation tax (25% main rate, 19% small profits rate below 50,000 profit), with the owner taxed on salary and dividends. More tax-efficient above approximately 30,000 to 40,000 profit. Adds administrative burden (annual accounts, confirmation statement, director responsibilities).

You must register for VAT when taxable turnover exceeds 90,000 in any rolling 12-month period (2024-25 threshold). You can voluntarily register below this threshold. Registered businesses charge VAT at 20% (standard rate) and can reclaim input VAT on business purchases.

Income tax at personal marginal rates (using an ABN, income is included in your personal tax return), the 2% Medicare Levy, and potentially GST (if turnover exceeds $75,000 per year). Unlike employees, no tax is withheld throughout the year. You pay via PAYG instalments or a lump sum at tax time.

An Australian Business Number is a unique identifier required to trade legally, invoice clients, register for GST, and claim fuel tax credits. Register free through the Australian Business Register (abr.gov.au). Without an ABN, clients are required to withhold 47% of payments under no-ABN withholding rules.

Expenses incurred in earning business income are deductible: home office running costs (67 cents per hour shortcut method for 2024), vehicle log book expenses, equipment (instant asset write-off for assets under $20,000 in 2024-25), professional development, software, business phone and internet, accountant fees.

GST registration is compulsory when taxable turnover reaches $75,000 per year ($150,000 for NFPs). Voluntary registration is allowed below this threshold. Once registered, charge 10% GST on sales and claim GST credits on business purchases. Lodge a Business Activity Statement (BAS) quarterly or annually.

Yes, self-employed individuals can make personal super contributions and claim a tax deduction (concessional contributions taxed at 15% inside super versus marginal rate outside). The concessional cap is $30,000 per year (2024-25). Contributions must be made before June 30 and a Notice of Intent submitted to the fund.

Federal and provincial income tax on net business income, plus both the employee and employer portions of CPP contributions (11.9% combined, maximum approximately $7,804 in 2024 on earnings between $3,500 and $68,500). No EI premiums unless voluntarily registered for special EI benefits.

Through quarterly tax instalments (required when tax owing exceeds $3,000 in the current or prior year), due March 15, June 15, September 15, and December 15. Final return and balance is due by June 15 (April 30 for balance payment). Penalty and interest apply on underpayments.

Business use of home (CRA-allowed portion of rent, utilities, internet), vehicle expenses (logbook method or simplified), equipment and tools, professional fees, advertising, office supplies, business insurance, travel for business purposes. Keep all receipts and maintain a log.

A Canadian Controlled Private Corporation (CCPC) pays the small business deduction rate (9% federal on active income up to $500,000). Income retained in the corporation defers personal tax until withdrawal. Worthwhile above approximately $50,000-$80,000 net profit where not all income is needed personally. Consult an accountant.

You must register for GST/HST when worldwide taxable revenues exceed $30,000 in any four consecutive quarters. Once registered, charge and remit GST/HST, but also claim Input Tax Credits on business purchases. Some supplies are exempt (certain health, educational, and financial services).