Self-Employment Taxes

Self-employment taxes refer to the social security tax and Medicare taxes that must be paid on the "net" earnings of an unincorporated business by the business owner (net earnings is after deducting most business expenses). I It is paid with the owner's individual income tax return- form 1040.
Other non-business deductions cannot eliminate this tax as it is a separate tax calculation.
Explanation: When you work for someone as an employee, social security and Medicare taxes are taken out of your pay check. When you work for someone as an employee, the employer must also pay his share of social security tax and Medicare taxes.
Self-employment tax represents both amounts - the employer and employee portion of the tax.

For 2013, 92.35% of your net earnings ( after your business expenses) from self-employment income are subject to a rate of 15.3% on the first $113,700.

You are required to pay self-employment tax on self-employment income after you retire and receive Social Security>

Rent from Real estate (except RE dealers), Dividends and Interest except dealers in securities) and Capital gains (except traders in securities) are not considered income subject to SE tax.

You are subject to self-employment tax on all earnings even though you can exclude from gross income your foreign earned income of up to $92,900 in 2011.

The Self-employment (SE) Tax of 15.3% consists of 12.4% for Social Security and 2.9% for Medicare.
After multiplying your Sole Proprietorship’s Net Earnings by .9235, the combined 15.3% rate applies to the maximum taxable earnings base of $113,700 or less and the 2.9% rate applies to all taxable earnings exceeding $113,700.

When services are performed in the parents’ home according to instructions by the parents, you are considered an employee of the parents and do not have self-employment earnings.

If you are a ordained minister, priest, rabbi or member of a religious order who has not taken a vow of poverty of a Christian Science practitioner then you are subject to SE Tax unless you elect not to be covered on the grounds of conscientious or religious objection to Social Security benefits. A application for exemption Filed on Form 4361 must be filed with the IRS.

The IRS takes the position that income earned by a Consultant is subject to SE Tax.