Self-employed workers in the US generally are required to file an annual return and pay an estimated quarterly tax.
Freelancers and other self-employed professionals must generally pay self-employed (SE Tax) as well as income tax. SE tax a primarily a social security and Medicare tax for individuals who work for themselves.
Medicare and Social Security for Self-Employed
The majority of people who pay into social security work for an employer- their employer deducts the amount from their paycheck. Self-employed people must independently report their earnings and pay their taxes directly to the US.
The IRS regard you as self-employed if you operate a trade, business or profession either by yourself or as a partner. Your earnings for Social Security should be reported when you file your federal income tax return.
For employed workers, 6.2% of up to $128,400 of earnings and a 1.45% Medicare tax on all earnings
For self-employed workers, 12.4% social security tax is paid on earnings up to $128,000 of net earnings and 2.9% Medicare tax on entire net earnings. The higher rate is due to the tax being taken as a combination of employer and employee tax.
For self-employed workers who have earned more than $200,000 ($250,000 as a married couple filing jointly), 0.9% more tax must be paid in Medicare.
Determining if you are subject to Self employed and income tax
Before you can determine if you are subject to self-employment tax and income tax you must figure your net profit or net loss from your business. This can be done by subtracting your business expenses from your business income; if your expenses are less than your income the difference is judged as a net profit and should be included on page 1 of form 1040. If your expenses are more than your income, the difference is judged as a net loss, and should deducted from your gross income on page 1 of your 1040 return.