How to Fill Out and File Schedule SE (Form 1040): Self-Employment Tax

To fill out Schedule SE (Form 1040), pull your net self-employment profit from Schedule C, Schedule F, or your partnership K-1 onto Part I, multiply the combined figure by 0.9235 to get your taxable earnings, apply 12.4% for Social Security (up to the annual wage-base cap) and 2.9% for Medicare, then carry the total to Schedule 2 and half of it to Schedule 1 as a deduction. Everyone with $400 or more in net self-employment earnings for the year needs to complete the form and attach it to their 1040.¹

Do You Actually Need to File

The main threshold is $400 in net self-employment earnings for the year. Freelancers, independent contractors, sole proprietors, and partners reporting their share of partnership income all fall under it. Age doesn’t matter, and neither does whether you’re already collecting Social Security retirement benefits.¹

A separate, lower threshold catches church employees. If you earned $108.28 or more in church employee income from an organization that opted out of employer payroll taxes, you file Schedule SE on that income even if your total net self-employment earnings fall below $400.² Income earned as a minister, member of a religious order, or Christian Science practitioner is treated differently and does not count as church employee income for this rule.

Two situations remove the requirement entirely. Ministers, non-vow-of-poverty members of religious orders, and Christian Science practitioners who file Form 4361 and receive IRS approval are permanently exempt from self-employment tax on their ministerial earnings.³ And if you live abroad in one of the 30 countries with a U.S. totalization agreement and pay into that country’s social security system, you can write “Exempt” on Schedule 2, line 4, attach a statement identifying the covering system, and skip Schedule SE entirely.

Gather Your Source Numbers First

Schedule SE doesn’t generate income figures on its own. It reads them off other schedules you’ve already completed. Before you start, pull:

Schedule C, line 31, for net business profit or loss (most sole proprietors and freelancers start here).
Schedule F, line 34, for net farm income. Farm partnership income comes from Schedule K-1 (Form 1065), box 14, code A.
Schedule K-1 (Form 1065), box 14, code A, for your share of ordinary partnership income subject to self-employment tax.⁴

If you also worked a W-2 job during the year, grab that W-2. The Social Security wages in box 3 tell you how much of the annual Social Security wage base has already been used up. You need that figure to avoid paying the 12.4% Social Security portion twice on the same dollars.

Working Through Part I

Part I is where the tax gets calculated. It looks dense, but the steps are short.

Lines 1a and 2: Enter your net farm profit on line 1a (from Schedule F or K-1 farm income) and your net non-farm profit on line 2 (from Schedule C or non-farm K-1 income).

Line 3: Add them together.

Lines 4a–4c: Multiply line 3 by 0.9235 (the 92.35% factor). The result is your taxable self-employment earnings.⁵ This reduction mirrors the deduction employers get on their share of payroll taxes. If the number on line 4c comes in under $400 and you have no church employee income, stop: you don’t need to file Schedule SE at all.²

Line 6: This is the combined figure the rest of the form runs against. It’s also the number Form 8959 will ask for later if the additional Medicare tax applies to you.

Lines 7–10 (the Social Security portion): Line 7 is the annual Social Security wage base cap. For tax year 2025 (filed in 2026), that cap is $176,100. For tax year 2026 (filed in 2027), it rises to $184,500.⁶ Subtract any Social Security wages you already earned from a W-2 (box 3) from that cap. Apply the 12.4% Social Security rate to the smaller of your remaining cap or your line 6 earnings. Someone with $150,000 in W-2 wages during 2025 would only owe the 12.4% Social Security rate on the first $26,100 of self-employment income ($176,100 minus $150,000).

Line 11 (the Medicare portion): Multiply your line 6 earnings by 2.9%. Medicare has no ceiling, so every dollar of self-employment income is subject to it.⁷

Line 12: Add the Social Security and Medicare amounts. That’s your self-employment tax. The combined rate is 15.3% for earnings below the Social Security cap and 2.9% for anything above it.

Line 13: Multiply line 12 by 50%. This is the deductible portion of your self-employment tax, calculated for you right on the form.⁸

Where the Numbers Go From Here

Two totals leave Schedule SE and land on other parts of your return.

Line 12 (the full self-employment tax) transfers to Schedule 2 (Form 1040), line 4. That’s how the tax gets added to your overall liability on Form 1040.⁴

Line 13 (half of the tax) transfers to Schedule 1 (Form 1040) as an income adjustment. It’s not an itemized deduction and it doesn’t go on Schedule C. Its function is to reduce your adjusted gross income, which can lower your income tax and help you qualify for other AGI-based breaks.⁷ The deduction reduces income tax only. It does not reduce the self-employment tax itself.

When to Use Part II Instead

Part II offers two optional methods for reporting a higher earnings figure than your actual results would produce. They exist so that filers with very low or negative self-employment income can still earn Social Security coverage credits and may qualify for the earned income credit.²

The nonfarm optional method is available when your actual net non-farm earnings are less than $1,600 and less than two-thirds of your gross non-farm income, and when you had net earnings of $400 or more in at least two of the three preceding years. You can use it at most five times in your lifetime. The farm optional method has its own rules and is generally more flexible. If you use either method, complete Part II rather than stopping at Part I.

Additional Medicare Tax for High Earners

An extra 0.9% Medicare tax applies once your combined wages and self-employment income cross a threshold set by filing status: $200,000 for single, head of household, or qualifying surviving spouse; $250,000 for married filing jointly; $125,000 for married filing separately.⁹ These thresholds are not indexed for inflation.¹⁰

The additional tax isn’t computed on Schedule SE. Instead, you report it on Form 8959 and attach that form to your return alongside Schedule SE.¹¹ Form 8959 pulls its self-employment earnings figure straight from Schedule SE, Part I, line 6.

Filing and Keeping Records

If you use tax software, Schedule SE is generated and attached automatically. The program reads your Schedule C or F profit, runs Part I, and drops the totals onto Schedule 2 and Schedule 1 without any manual transfer. Before you e-file, look at the software’s summary and confirm both the self-employment tax line and the 50% deduction actually appear.

Paper filers attach Schedule SE to Form 1040 in the sequence listed in the Form 1040 instructions. The mailing address depends on your state and whether you’re enclosing a payment; the IRS publishes it in the Form 1040 instructions and on its “Where to File” page at irs.gov. Certified mail gives you proof of timely filing.

Once your return is processed, the self-employment tax you paid feeds into your Social Security earnings record and shapes the retirement, disability, and survivor benefits you or your family may eventually collect. Keep copies of Schedule SE and its supporting schedules for at least three years (the standard IRS audit window), and longer if you’d like a paper trail for future disputes with SSA about your earnings history.⁸

1
Internal Revenue Service. Self-Employed Individuals Tax Center
2
Internal Revenue Service. Instructions for Schedule SE (Form 1040)
3
Internal Revenue Service. About Form 4361, Application for Exemption From Self-Employment Tax for Use By Ministers, Members of Religious Orders and Christian Science Practitioners
4
Internal Revenue Service. IRS Schedule SE Form 1040
5
Internal Revenue Service. Topic No. 554, Self-Employment Tax
6
Social Security Administration. Contribution and Benefit Base
7
Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)
8
Social Security Administration. If You Are Self-Employed
9
Office of the Law Revision Counsel. 26 USC 1401 – Rate of Tax
10
Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
11
Internal Revenue Service. Instructions for Form 8959