Who has to pay self-employment tax?
If you receive income from carrying on a business as a sole-proprietor (or independent contractor), or as a member of a partnership, it is generally considered self-employment income, and therefore subject to self-employment tax. You are considered a sole-proprietor by the IRS if you own an unincorporated business by yourself. Your business can be full-time or part-time, you can be an employee for someone else as well as having your own business, you can even have more than one sole-proprietorship. But as long as you are not a corporation, your business income will be subject to self-employment tax. Tax Rates and Limits If your net self-employment income (business income minus business expenses) is less than $400, you will not owe any self-employment taxes. If your net business income is $400 or more, you will pay self-employment tax on the full amount of your net business income. For example, if you made $600 in your yard maintenance business, and had $350 worth of business expenses,
