Just What You Needed: Higher Taxes
While many employees may not realize the magnitude of the Social Security tax, self-employed folks know it all too well. That's because the self-employed must pay the entire 12.4% tax rate out of their own pockets, based on the amount of their net self-employment income.
This article examines the unfortunate burden that Social Security taxes pose on the self-employed, who have to pay both side of the tax as they are, effectively, both employer and employee. The article runs some hard numbers to find the actual costs in various cases and then to predict future costs with the projected increases to the Social Security taxes ceiling.
Tags: Self-employment, Social Security tax, tax ceiling