Self-Employed Taxes, Explained
If you work for yourself, no one withholds taxes and there's no W-2 — you owe income tax plus self-employment tax and pay it yourself, four times a year. Done right, deductions keep the bill manageable.
Self-employment tax is the big surprise
On top of income tax, you owe 15.3% self-employment tax (12.4% Social Security up to the wage base + 2.9% Medicare) on 92.35% of net profit. Half of it is deductible against income tax. This is the line item that catches first-year self-employed workers off guard.
Schedule C deductions add up
Home office, equipment, software, supplies, business mileage at $0.725/mi (2026), professional development, and a business percentage of phone/internet all reduce taxable profit. The home-office deduction (simplified: $5/sq ft up to 300 sq ft) is among the most under-claimed.
Quarterly estimates and safe harbor
The IRS expects estimated payments roughly Apr/Jun/Sep/Jan. The safe-harbor rule — pay 100% of last year's tax (110% if higher income) — avoids underpayment penalties even if this year is bigger. Gigaverse estimates each quarter from your numbers.
The S-corp question
At higher, stable self-employment income, electing S-corp status can reduce self-employment tax by splitting pay into salary + distributions — but it adds payroll, filings, and cost, and isn't worth it for everyone. It's a per-situation call for a tax professional, not a default move.
Frequently asked
How much self-employment tax will I owe?+
About 15.3% of 92.35% of your net profit — roughly 14.1% of profit — on top of income tax. Half is deductible. A calculator using your actual numbers gives a precise estimate; this is an educational overview, not tax advice.
What can the self-employed deduct?+
Home office, equipment, software, supplies, mileage, professional development, and a business percentage of phone/internet on Schedule C. Gigaverse categorizes them automatically; your deduction depends on your activity.
When should I consider an S-corp?+
Generally at higher, steady income where the self-employment-tax savings outweigh added payroll and admin costs. It varies by situation — consult a tax professional before electing.
Let Gigaverse handle it automatically
Auto-tracked deductions Quarterly estimates Portable IRA
Educational estimates only — not tax, legal, or investment advice. Gigaverse is not a bank; brokerage services via a FINRA/SIPC-member broker-dealer. Outcomes depend on your individual circumstances.