Self-employment tax is a separate payment you make directly to the IRS, not withheld from a paycheck
When you work for yourself, you pay two types of tax: income tax (like any worker) and self-employment tax, which covers Social Security and Medicare. An employer normally withholds both from your paycheck. When you're self-employed, you withhold and pay them yourself. The IRS expects these payments four times a year, not once at tax time.
Self-employment tax is 15.3% of your net profit — 12.4% for Social Security and 2.9% for Medicare. You calculate it on Schedule SE (the form itself), then transfer that amount to the IRS on a payment schedule that matches the calendar quarters. You can pay by check, electronic transfer, credit card, or through the IRS Direct Pay system.
The mechanics are straightforward once you know the schedule and where to send the money. Most self-employed people either pay four times yearly (called estimated tax payments) or wait and pay the full amount when they file their tax return in April. The IRS penalizes you if you underpay during the year, so understanding the threshold matters.
Key Takeaways
- Self-employment tax is 15.3% of your net profit and covers Social Security and Medicare; you pay it yourself instead of an employer withholding it.
- The IRS expects payment four times yearly in quarterly installments due April 15, June 15, September 15, and January 15 of the following year.
- You calculate the amount owed on Schedule SE, which you attach to your tax return or file separately if paying quarterly.
- You can pay by check, electronic transfer, credit card, or through IRS Direct Pay; the method you choose does not change the amount or deadline.
- If your expected tax for the year is under $1,000, you can skip quarterly payments and pay the full amount when you file your return in April.
How to calculate what you owe
Start with your net profit — the money left after you subtract business expenses from gross income. This is not your total revenue. If you made $50,000 but spent $15,000 on supplies, rent, and equipment, your net profit is $35,000. Self-employment tax is calculated on that $35,000.
You report this on Schedule SE, which is a two-page IRS form. Section A (Short Schedule SE) is simpler and works if your net profit is under $400,000. You enter your net profit, the form multiplies it by 92.35% (a standard deduction), then multiplies that result by 15.3%. The final number is your self-employment tax for the year.
Once you know the annual amount, divide it by four to find each quarterly payment. If your annual self-employment tax is $4,000, you pay $1,000 each quarter. If you expect the total to be under $1,000 for the year, you can skip quarterly payments and pay everything in April when you file.
Quarterly payment deadlines and how to pay
The IRS divides the year into four quarters, each with its own due date:
| Quarter | Income earned | Payment due date |
|---|---|---|
| Q1 | January 1 – March 31 | April 15 |
| Q2 | April 1 – May 31 | June 15 |
| Q3 | June 1 – August 31 | September 15 |
| Q4 | September 1 – December 31 | January 15 (next year) |
You have four payment methods. IRS Direct Pay is free and lets you schedule payments online at irs.gov; you can set them up weeks in advance. Electronic Federal Tax Payment System (EFTPS) is also free and works through your bank. You can pay by check — write "1040-ES" on it and mail it to the address on the voucher (Form 1040-ES). You can also pay by credit or debit card through an IRS-approved payment processor, though they charge a fee (usually 1.5% to 2%).
If a deadline falls on a weekend or holiday, the due date moves to the next business day. If you miss a deadline, the IRS charges a penalty and interest on the unpaid amount. The penalty is usually 0.5% per month of the unpaid tax.
When to pay all at once instead of quarterly
You do not have to make quarterly payments if your expected self-employment tax for the year is less than $1,000. In that case, you can pay the full amount when you file your tax return in April. This works for people with low or part-time self-employment income.
Even if you do make quarterly payments, you will still file a tax return in April. The quarterly payments are credited against your total tax liability for the year. If you overpaid during the year, you get a refund. If you underpaid, you owe the difference.
Some self-employed people also choose to pay all at once in April rather than four times yearly, even when their tax is over $1,000. This is allowed, but the IRS will charge a penalty for underpayment during the year — meaning you will owe more in April than if you had paid quarterly. The penalty is usually small (a few dollars to a few hundred, depending on income), but it exists.
What happens if you miss a payment or pay late
If you miss a quarterly deadline, the IRS charges a failure-to-pay penalty of 0.5% per month on the unpaid amount, plus interest. The interest rate changes quarterly and is currently around 8% annually, but it varies. If you owe $1,000 and miss the deadline by three months, you will owe roughly $1,040 to $1,050 by the time you pay.
You can still pay late — there is no cutoff date. The penalty and interest simply accumulate. If you realize you will miss a deadline, pay as soon as you can. Paying late is better than not paying at all, because the IRS will eventually file a lien against your assets or garnish your bank account if the debt goes unpaid for years.
If you have a legitimate hardship (serious illness, natural disaster, or other emergency), you can request a penalty waiver by filing Form 843 (Claim for Refund and Request for Abatement). The IRS does not always grant these, but it is worth trying if your situation is genuine.
Tracking income and expenses throughout the year
To calculate self-employment tax accurately each quarter, you need to know your net profit. This means tracking income and expenses as you earn and spend money, not waiting until December. Many self-employed people use spreadsheets, accounting software (like QuickBooks or Wave), or a simple notebook.
Keep receipts for all business expenses: supplies, equipment, rent, utilities, vehicle mileage, professional services, and anything else directly tied to earning income. The IRS allows you to deduct these from your gross income, which lowers your self-employment tax. If you skip tracking during the year, you will either overestimate your tax (and overpay quarterly) or underestimate it (and face penalties in April).
Some self-employed people also set aside money each month to cover their tax bill. If you owe $4,000 for the year, setting aside $1,000 per month means the money is there when each quarterly deadline arrives. This is not required, but it prevents the shock of a large payment due date.
Self-employment tax versus income tax
Self-employment tax and income tax are separate. Self-employment tax is always 15.3% of net profit (with the 92.35% adjustment). Income tax depends on your total income, filing status, and deductions — it can range from 0% to 37% depending on your tax bracket.
When you file your tax return in April, you report both. Schedule SE calculates self-employment tax. Your 1040 form calculates income tax. You pay both to the IRS, either through quarterly payments you already made or as a lump sum in April. Some self-employed people owe very little income tax (because they have deductions or credits) but still owe self-employment tax. Others owe both.
You can reduce your income tax by deducting business expenses and taking the standard deduction (or itemizing). You cannot reduce self-employment tax through deductions — it is always calculated on net profit. However, you can deduct half of your self-employment tax from your income, which lowers your income tax slightly.
Frequently Asked Questions
Do I have to make quarterly payments, or can I wait and pay in April?
If your expected self-employment tax is under $1,000 for the year, you can wait and pay in April. If it is $1,000 or more, the IRS expects quarterly payments. If you do not pay quarterly and owe more than $1,000, you will face an underpayment penalty in April, even if you pay the full amount then.
What if my income varies month to month?
You can adjust your quarterly payments based on actual income earned in each quarter. If Q1 was slow but Q2 was busy, pay less in April and more in June. You can also use the annualized income method on Form 1040-ES to calculate uneven payments. Many self-employed people simply divide their expected annual tax by four and pay the same amount each quarter for simplicity.
Can I pay self-employment tax with a credit card?
Yes, but an approved payment processor will charge a fee (usually 1.5% to 2.5%). Paying by check, electronic transfer, or IRS Direct Pay is free. If you have cash flow problems and need to use a credit card, the fee is a cost of doing business, but it adds to what you owe.
What if I made a mistake on a quarterly payment?
You can file an amended return (Form 1040-X) when you file your annual return in April. If you overpaid, you will get a refund. If you underpaid, you will owe the difference plus any penalty and interest. The IRS will calculate the exact amount owed when they process your return.
Do I need to file Schedule SE if I made less than $400?
No. If your net self-employment income is under $400, you do not owe self-employment tax and do not file Schedule SE. You may still owe income tax if your total income (including other sources) is high enough, so you may still file a return.