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Social Security and Medicare are payroll taxes. SE is an income tax
that Congress came up with to get the same money out of people who
aren't on a payroll.
"Self-employment tax (SE tax) is a social security and Medicare tax
primarily for individuals who work for themselves. It is similar to
the social security and Medicare taxes withheld from the pay of most
wage earners."
On Tue, Dec 22, 2009 at 8:49 PM, <quills -at- airmail -dot- net> wrote:
> Aren't you also paying SS and Medicare? You should be.
>
> Scott
>
> On 12/22/09 7:04 PM, Robert Lauriston wrote:
>> On 1099 income you pay 15.3% self-employment tax but on W-2 income you
>> pay half that in Social Security and Medicare (your employer picks up
>> the other half). So 1099 rates only have to be 8% higher to make up
>> the difference.
>>
>> Also, you pay SE tax only on net income. If you have expenses, that
>> lowers the tax. Can't do that with W-2. So even the same rate on 1099
>> could lead to a lower tax bill.
>>
>> On Tue, Dec 22, 2009 at 3:25 PM, Keith Hood<klhra -at- yahoo -dot- com> wrote:
>>> Generally I won't touch a 1099 job unless the pay rate is at least 15% higher than the W2 rate. The self-employment taxes can really eat your lunch come April.
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