IRS Publication 334 — Tax Guide for Small Business (Schedule C)

Be sure to report all of your self -employment income. By not reporting all of it, you could cause your social security benefits to be lower when you retire.

How to become insured under social security. You must be insured under the social security system before you begin receiving social security benefits. You are insured if you have the required number of credits (also called quarters of coverage), discussed next. Earning credits in 2025 and 2026. For 2025, you received one credit, up to a maximum of four credits, for each $1,810 ($1,890 for 2026) of income subject to social security tax. Therefore, for 2025, if you had income (self-employment and wages) of $7,240 that was subject to social security tax, you received four credits ($7,240 ÷ $1,810).

For an explanation of the number of credits you must have to be insured and the benefits available to you and your family under the social security program, consult your nearest SSA office.

Making false statements to get or to increase social security benefits may subject you to penalties. The SSA time limit for posting self -employment income. Generally, the SSA will give you credit only for self-employment income reported on a tax return filed within 3 years, 3 months, and 15 days after the tax year you earned the income. If you file your tax return or report a change in your self -employment income after this time limit, the SSA may change its record but only to remove or reduce the amount. The SSA will not change its records to increase your self-employment income.

Who must pay SE tax. You must pay SE tax and file Schedule SE (Form 1040) if either of the following applies.

1. Your net earnings from self-employment (excluding church employee income) were $400 or more.

2. You had church employee income of $108.28 or more. The SE tax rules apply no matter how old you are and even if you are already receiving social security or Medicare benefits. CAUTION !

CAUTION !

CAUTION !

SE tax rate. The SE tax rate on net earnings is 15. 3% (12.4% social security tax plus 2.9% Medicare tax). Maximum earnings subject to SE tax. Only the first $176,100 of your combined wages, tips, and net earnings in 2025 is subject to any combination of the 12.4% social security part of SE tax, social security tax, or the Tier 1 part of railroad retirement tax.

All your combined wages, tips, and net earnings in 2025 are subject to any combination of the 2.9% Medicare part of SE tax, Medicare tax, or Medicare part of railroad retirement tax.

If wages and tips you receive as an employee are subject to either social security tax or the Tier 1 part of railroad retirement tax, or both, and total at least $176,100, don’t pay the 12.4% social security part of the SE tax on any of your net earnings. However, you must pay the 2.9% Medicare part of the SE tax on all your net earnings. Deduct one-half of your SE tax as an adjustment to income on line 15 of Schedule 1 (Form 1040). Additional Medicare Tax. A 0.9% Additional Medicare Tax may apply to you if your net earnings from self -employment exceed one of the following threshold amounts (based on your filing status).

• Married filing jointly—$250,000.

• Married filing separately—$125,000.

• Single, Head of household, or Qualifying surviving spouse—$200,000.

If you have both wages and self -employment income, the threshold amount for applying the Additional Medicare Tax on the self-employment income is reduced (but not below zero) by the amount of wages subject to Additional Medicare Tax. Use Form 8959, Additional Medicare Tax, to figure this tax.

More information. For information on methods of calculating SE tax, see chapter 10. TIP 10 Chapter 1 Filing and Paying Business Taxes Publication 334 (2025)