#self-employment-tax
Self-employment tax rules, calculations, and strategies for business owners
For 2025 tax year returns filed in 2026, the IRS charges partnerships and S-corps $255 per partner or shareholder per month for late Forms 1065 and 1120-S, plus $330 per late Schedule K-1, while a new automatic relief program forgives first-time penalties for taxpayers with three years of clean compliance history.
NIL income is self-employment income subject to a 15.3% self-employment tax on top of ordinary income tax, and college athletes owe tax on any net NIL earnings over $400 even without a 1099, a form now only required above the 2026 threshold of $2,000.
The "60/40 rule" for splitting S-corp salary and distributions has never appeared in any IRS regulation. What the IRS actually applies is a facts-and-circumstances test — the one that reclassified a CPA's $24,000 salary to $91,044 and cost him $23,000 in back payroll taxes. Here's how to set a defensible number.
Podcast sponsorship revenue should be recognized when a host-read ad airs, not when the invoice is paid, and creators must reconcile gross Patreon 1099-Ks against net ad-network payouts to avoid over- or under-reporting taxable income.
Utah, Tennessee, Alabama, Georgia, and West Virginia have passed portable benefits laws letting businesses fund contractor health, retirement, or PTO accounts without that contribution counting as evidence of misclassification under state law — but the safe harbor is state-only and doesn't touch federal IRS or DOL tests.
Powerboat and pontoon rental income is reported on Schedule C, not Schedule E, which subjects net profit to the full 15.3% self-employment tax — a distinction that shapes how these seasonal businesses should handle depreciation, off-season cash reserves, and an eventual S-corp election.
Print-on-demand sellers who are merchants of record (Shopify with Printful or Printify) owe sales tax themselves and can deduct real COGS, while royalty-based marketplace sellers (Redbubble, Amazon Merch, Etsy) owe no sales tax because the platform is a marketplace facilitator and have no deductible COGS at all.
The 2026 Social Security wage base rises to $184,500 from $176,100, pushing the maximum employer-side Social Security tax per employee up $520.80 to $11,439, and resets to zero separately for every employer a highly paid employee joins mid-year.
A freelancer earning $80,000 net self-employment income can shelter roughly $43,070 in a Solo 401(k) versus $18,570 in a SEP IRA in 2026 — the gap comes entirely from the $24,500 employee-deferral bucket that SEP IRAs don't offer.
Substack newsletter creators are self-employed under IRS rules, owe 15.3% self-employment tax on net profit via Schedule C, and receive a 1099-K only above $20,000 in gross payments and 200 transactions — though all income must be reported regardless.
VA agencies face IRS misclassification risk on contractor VAs, must recognize standing-ready vs activity-based retainers under ASC 606, and typically lose revenue to unbilled client hours without real-time time tracking.
Voiceover income mixes 1099s, direct payments that never generate a tax form, 10% agent commissions on some income but not all, and residuals that arrive years after the session. How voice actors handle Schedule C reporting, the §280A exclusive-use home studio deduction, 100% bonus depreciation on mic and booth gear, multi-state tax exposure, and the one KPI — booked hours per audition — that shows whether the business works.
