- 1). Calculate income earned for the year, including wages and self-employment income. For employees, keep this amount. For Self-Employed multiply by 92.35%. This is because one-half of the self-employment tax is allowed as a for-AGI deduction, thus reducing the amount paid.
Example: Wages Total = $50,000 (Employee)
Example: Wages Total = $50,000 * 92.35% = $46,175 (Self-Employed) - 2). Multiply by 6.2% for all income earned. This is the social security tax amount. Your employer also matches this amount. For self-employed individuals this amount is 12.4%.
Example: $50,000 * 6.2% = $3,100 (Employee)
Example: $46,175 * 12.4% = $5,725.70 (Self-Employed) - 3). Multiply by 1.45% for income earned up to $102,000 for 2008 or $106,800 for 2009. This is the Medicare amount. Your employer also matches this amount. For self-employed individuals this amount is 2.9%.
Example: $50,000 * 1.45% = $725 (Employee)
Example: $46,175 * 2.9% = $1,339.08 (Self-Employed) - 4). Add amounts from step 2 and step 3.
Example: $3,100 + $725 = $3,825 (Employee)
Example: $5,725.70 + $1,339.08 = $7,064.78 (Self-Employed) - 5). Total equals the amount owed for payroll taxes during the year. Your employer also matches this amount.
Example: $3,825 (Employee)
Example: $7,064.78 (Self-employed)
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