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Example #1: If you earn $77,000 in self-employment income, you must pay self-employment taxes on $71109.50 ($77,000 x .9235). You then pay a tax of 15.3% on that income (12.4 percent for Social Security and 2.9 percent for Medicare) for a subtotal of $10,879.75. You then deduct 50 percent, for a final total of $5,439.88.

Example #2: If you earn $198,000 in self employment income, you must pay taxes on $182,835 ($198,000 x .9235). You then pay a tax of 15.3% (12.4 percent for Social Security and 2.9 percent for Medicare) on the first $87,000 of income ($10,788) and 2.9 percent for everything above ($95,835 x 2.9 = $2,779.21) for a subtotal of $13,567.22. You then deduct 50 percent for a final total of $6,783.60.


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