CH 5: The Self-Employment Contributions ACT (SECA)

If an individual is both self employed and receives earnings that are subject to FICA from a second job, that person must be sure to pay the full 15.3% tax on only the first ________________ earned

$118,500

While the full 15.3% self-employment tax is levied on the first :

$118,500

Self-employment taxes must be remitted by any individual whose net self-employment income totals ___________ or more for the year

$400

The employee is subject to Additional Medicare Tax of _______ that exceed the applicable threshold

0.9%

Medicare Tax

1.45%

SE - Social Security Tax

12.4%

Net-Self-Employment

15.3%

Since a self-employed individual takes on the role of both employer and employee, self unemployment taxes total

15.3% of net-self-employment income

SE - Medicare Tax

2.9%

Social Security Tax

6.2%

Statutory non employees

Certain workers are considered to be self employed by virtue of their professions: real estate agents, companion sitters

Net self-employment income

Represents income after certain business expenses are subtracted

Very similar to Social security and Medicare Taxes

SE taxes

Self Employment Contributions Act of 1954 (SECA)

established that self employed individuals must pay self-employment taxes (SE taxes)

Individual who is both self-employed and receives earnings that are subject to FICA taxes from a second job must combine these earnings to determine:

if the applicable Additional Medicare Tax Threshold has been exceeded in a single year

For direct sellers and real estate agents to be treated as statutory nonemployees, they must be compensated based on

sales (not hours worked), and must have a written contract that dictates that they are not employees

Self Employment Taxes

serve to ensure that self employed individuals are taxed in a manner similar to standard employees