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in this video we're going to talk about how to calculate your self-employment tax but before we do if this is your first time at our channel or you haven't subscribed click on the subscribe button at the bottom my name is travis sickle certified financial planner helping you reach your financial goals [Music] [Applause] so self-employment tax is your payroll tax also known as fica and fica is your federal insurance contributions act and these are the payments the payroll payments that you're making to pay for social security and medicare now they can further be broken down into the employer side and the employee side so as somebody who is self-employed you're going to pay both sides because you're both the employee and the employer now before we do the calculation i want to break it down just so you can see how all the numbers add up so we're going to start with social security and medicare so the social security side is going to be 6.2 percent for the employee and then it's going to be 6.2 percent for the employer and then on the medicare side it's going to be 1.45 percent for the employee and then 1.45 for the employer now if we add up the social security that's going to equal 12.4 percent and then if we add up the medicare side that's going to be 2.9 which if we add these two numbers up 12.4 percent plus the 2.9 percent that is going to equal 15.3 percent and if we further add these two and these two that's going to be 7.65 percent for the employee and then 7.65 percent for the employer which equals our 15.3 percent so this will be for our employer and this will be for our employee now before we get into the actual calculation and multiply it out to figure out what our self-employment taxes are we need to understand two terms one is called net profit and the other one is net earnings from self-employment now there's a slight difference in the two but if you use the wrong number you're gonna get the wrong answer so you can find your net profit on your schedule c for profit and loss from your business and on line seven for 2019 you're going to see your gross income for this example we're going to use a hundred thousand dollars now you can see in part two your expenses i didn't put any expenses here but these would be subtracted from your gross income and on line 31 of your schedule c is where you're going to find your net profit and this is the number that we're going to put on our self-employment tax or our schedule se so let me go ahead and pull that up this is where we're gonna do the calculations for our self-employment tax and what you can see here is that we put our net profit on line two or...