What are Social Security and Medicare?
Both are government programs designed to help when you’re retired. Social Security provides financial benefits every month, starting you once you retire. Medicare provides health insurance to those who are 65 or older, as well as to those who are under 65 and have certain disabilities.
I pay taxes for Social Security and Medicare?
If you’re self-employed or freelance, you’re responsible for paying the full amount of your Social Security and Medicare taxes. This is typically done through self-employment tax, which is calculated as a percentage of your net earnings.
Even though you don’t have an employer splitting the cost of these taxes with you, you’re still eligible as a freelancer or self-employed worker for these benefits, provided you earned a certain amount of income and paid taxes on it.
How much is self-employment tax?
The tax is 15.3% of your income. It’s broken down into two buckets. The tax rate for Social Security is 12.4% on earnings up to a certain amount, and the tax rate for Medicare is 2.9%, adding up to the total 15.3%.
When do I pay?
Self-employment taxes are typically paid quarterly, along with your income taxes. You can make these payments through the Electronic Federal Tax Payment System (EFTPS) or by mailing a check or money order to the IRS.
Alternatively, Catch helps you pay your taxes online or within the app. You can do it yourself or have Catch automatically send payments.
It's important to keep track of your self-employment taxes and make sure you pay them on time to avoid penalties and interest.