Social Security tax for a self-employed contractor is based on the rate set for which period?

Social Security tax for a self-employed contractor is based on the rate set for which period?

• A. Based on the rate set for the self-employed for the year in which the tax is paid
• B. Based on a fixed rate that never changes
• C. Paid by the employer only
• D. Not applicable to self-employed individuals

Answer: (A)

Self-employment tax is figured each tax year. The rate used is the rate in effect for the year you owe the tax, and it can change from year to year. You apply that year’s rate to your net earnings from self-employment (up to the Social Security wage base for that year). The tax is paid by you, the self-employed person, not by an employer.

Self-employment tax is figured each tax year. The rate used is the rate in effect for the year you owe the tax, and it can change from year to year. You apply that year’s rate to your net earnings from self-employment (up to the Social Security wage base for that year). The tax is paid by you, the self-employed person, not by an employer.