In this tax tutorial, you will learn about self-employment income and the self-employment tax.

Self-employed individuals are independent contractors, not employees.

• Self-employed individuals control the methods and means by which they perform services for others.

For a business owned by just one person, self-employment income, expenses, and profit or loss are reported on Form 1040, Schedule C, Profit or Loss From Business or Schedule C-EZ, Net Profit from Business.

• Self-employment profit increases the income that is subject to tax.
• Self-employment loss reduces the income that is subject to tax.

The self-employment tax is

• calculated on Schedule SE, Self-Employment Tax.
• reported on Form 1040, U.S. Individual Income Tax Return.

The self-employment tax increases the total tax.

One-half of the self-employment tax reduces the income that is subject to tax.