How to Calculate and Pay Self-Employment Tax: Burbank Guide 2026

Understanding Self-Employment Tax in Burbank, CA

Self-employment tax is a special tax that applies to individuals who work for themselves. This includes freelancers, independent contractors, and business owners in Burbank and the greater Los Angeles area.

In 2026, self-employment tax consists of Social Security and Medicare taxes assessed on your net earnings. In California, self-employed individuals often worry about additional state taxes and compliance with various regulations.

This guide will help you understand how to calculate and pay self-employment tax, ensuring you remain compliant while maximizing your deductions.

What is Self-Employment Tax?

Self-employment tax is primarily composed of two components:

• Social Security Tax: This is currently set at 12.4% on the first $147,000 (as of 2026) of your net earnings.
• Medicare Tax: This is set at 2.9%, with an additional 0.9% for earnings over $200,000.

Both are calculated on your net earnings, which is your total income minus any allowable business expenses. This differs from employees, who share these tax burdens with their employers.

How to Calculate Your Self-Employment Tax

Step 1: Calculate Your Net Earnings

1. Total Income: Start by adding all your self-employment income for the year, including services, sales, and any other business income.
2. Subtract Business Expenses: Identify and subtract all eligible business expenses. This can include:
   • Home office expenses
   • Equipment and supplies
   • Vehicle costs
   • Marketing and advertising fees
   • Professional services (like using our team's expertise at Calculus Tax)

For detailed guidance on business expenses, check out our article on Avoiding Common Bookkeeping Mistakes for Burbank Businesses.

Step 2: Determine the Self-Employment Tax Rate

Your net earnings are subject to a self-employment tax rate of 15.3% (composed of the Social Security and Medicare tax rates mentioned earlier). To calculate:

• Multiply your net earnings by 92.35% (to ensure you're only calculating based on applicable net income).
• Then apply the 15.3% rate to find your total self-employment tax.

Example Calculation

For example, if you have:

• Total Income: $100,000
• Total Expenses: $30,000
• Net Earnings: $70,000

1. Calculate your net earnings:
   • $100,000 - $30,000 = $70,000
2. Calculate taxable income:
   • $70,000 * 92.35% ≈ $64,645
3. Calculate self-employment tax:
   • $64,645 * 15.3% ≈ $9,930

Step 3: Filling Out the Necessary IRS Forms

1. Schedule C (Form 1040): Report your income and expenses on this form.
2. Schedule SE (Form 1040): Use this form to calculate your self-employment tax.

Both forms must be submitted with your federal tax return. Ensure you stay abreast of any filing deadlines, typically April 15th, unless you file for an extension.

Paying Your Self-Employment Tax

Estimated Tax Payments

As a self-employed individual, you may need to make estimated quarterly tax payments to the IRS and the California Franchise Tax Board. Here’s how to do it:

1. Estimate Your Tax Liability: Use the previous year's net earnings to gauge this year’s potential tax due.
2. Divide by Four: Split the estimated amount into quarterly payments.
3. Make Payments: Ensure timely payments using IRS Form 1040-ES and state methods outlined by the California Franchise Tax Board.

Monitoring Changes in Tax Laws

Because tax regulations can fluctuate, especially in California, keep an eye on any updates from the IRS or the California Franchise Tax Board. They often announce changes that can impact your self-employment tax responsibilities. Refer to California’s Franchise Tax Board for specific state guidelines and forms.

Additional Forms

Don’t forget about California payroll tax forms like DE-9 if you have employees. Tracking all applicable forms helps maintain good standing with both federal and state authorities.

Common Deductions for Self-Employed Individuals in Burbank

Reducing your taxable income means identifying and claiming all applicable deductions. Here are some common examples:

• Home Office Deduction: If you have a dedicated space in your home for business.
• Vehicle Expenses: Deduct business-related vehicle use either through mileage or actual expenses.
• Health Insurance Premiums: Self-employed individuals can often deduct their health insurance costs.

Keeping organized records will help you claim these deductions effectively and prepare for the annual audit season.

For further assistance on keeping your bookkeeping in check, check out our article on Best Accounting Practices for Garage Door Companies in Burbank, CA.

Conclusion

Successfully navigating self-employment taxes in Burbank takes time, diligence, and an understanding of both federal and state regulations. Following the steps outlined above will empower you to not only calculate but also pay your self-employment taxes with confidence. If you're ever in doubt, don’t hesitate to consult with professionals like the dedicated team at Calculus Tax.

Remember, tax laws are subject to change, so stay current and organized throughout the year. Let us help you pave the path to your self-employment success. If you have any more questions or need assistance, feel free to reach out.