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Use the following steps to calculate the SE tax.

1. Figure your net SE income. The net profit from your business or profession is generally your net SE income.
   
2. After you figure your net SE income, determine how much is subject to SE tax. The amount subject to SE tax is called net earnings from self-employment. It is figured on Short Schedule SE, line 4, or Long Schedule SE, line 4a.
   
3. Figure your SE tax as follows.

• If your net earnings from self-employment plus any wages and tips are not more than $90,000 for 2005, and you do not have to use Long Schedule SE, use Short Schedule SE. On line 5, multiply your net earnings by the 15.3 percent (.153). The result is the amount of your SE tax.
  
• If you had no wages, your net earnings from self-employment are more than $90,000 for 2005, and you do not have to use Long Schedule SE, use Short Schedule SE. On line 5, multiply the line 4 net earnings by the 2.9 percent (.029) Medicare tax and add the result to $11,160 (12.4 percent of $90,000). The total is the amount of your SE tax.
  
• If your net earnings from self-employment plus any wages and tips are more than $90,000 for 2005, you must use Long Schedule SE. Subtract your total wages and tips from $90,000 to find the maximum amount of earnings subject to the 12.4 percent social security part of the tax. If more than zero, multiply the amount by 12.4 percent (.124). The result is the social security tax amount. Then multiply your net earnings from self-employment by 2.9 percent (.029). The result is the Medicare tax amount. The total of the social security tax amount and the Medicare tax amount is your SE tax.

See other pages in this section for examples of the SE Tax calculation. Also, see IRS Publication No. 533 for additional information on self-employment taxes.

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