Self-Employment Tax Form: Guide for US Freelancers (2026)

Being self-employed means you are responsible for your own taxes. This includes paying Social Security and Medicare taxes, which employees usually have withheld from their paychecks. The IRS requires a specific form for this purpose.

This guide explains the self-employment tax form, who must file it, and how to calculate the amount you owe based on 2025-2026 rates.

Need to send and receive cross-border business payments?
Try Wise Business ->

Key Takeaways for filing on 2025 income

What is the self-employment tax form?

Self-employment tax is how the US government collects Social Security and Medicare taxes from individuals who work for themselves.

The primary form is Schedule SE (Form 1040).¹ Its purpose is to report your net earnings and calculate the tax due. You are generally considered self-employed if you are an independent contractor, a sole proprietor, or a partner in a business.

Tip: If you receive income in multiple currencies, all amounts must be converted and reported in US dollars based on the exchange rate at the time the income was received.

Who needs to file Schedule SE?

You must file Schedule SE if your net earnings from self-employment were $400 or more during the tax year.² This applies to:

• Freelancers and gig workers.
• Independent contractors (1099-NEC recipients).
• Small business owners and sole proprietors.

Even if you worked as a freelancer for only part of the year while holding a W-2 job, you must file if you meet that $400 threshold.

How do you calculate self-employment tax?

The tax is calculated on 92.35% of your net earnings, not the full amount. This adjustment is designed to make the tax burden comparable to that of a W-2 employee.

1. The Standard Rate (15.3%)

• Social Security (12.4%): For 2025 income, this only applies to the first $176,100. Any income above this is exempt from the 12.4% portion.²
• Medicare (2.9%): This applies to all net earnings with no upper limit.

2. Additional Medicare Tax (0.9%)

If your total self-employment income (combined with any W-2 wages) exceeds certain thresholds, you may owe an Additional Medicare Tax of 0.9%.³

• Single / Head of Household: $200,000
• Married Filing Jointly: $250,000

3. The "Employer" Deduction

You can deduct 50% of your calculated self-employment tax on your Form 1040. This deduction reduces your overall Adjusted Gross Income (AGI), lowering your income tax.

Wise Business Could Help Your Company Save on Global Payments

New for filing in 2026: Tips and Overtime Allowances

Under recent legislation (like the OBBBA), certain self-employed individuals may be eligible for new deductions:³

• Qualified Tips: You may be able to deduct up to $25,000 in qualified tips from your taxable income base.
• Qualified Overtime: A deduction of up to $12,500 may apply for qualified overtime-equivalent work.

Note: These benefits phase out for high earners (e.g., above $150,000 for single filers).

Reporting Estimated Taxes

The IRS operates on a "pay-as-you-go" system. If you expect to owe $1,000 or more in taxes, you must typically make quarterly estimated payments using Form 1040-ES.⁴

Failing to make these payments throughout the year can result in underpayment penalties, even if you pay the full amount by the April deadline.

Save Time and Money On Overseas Payments With Wise Business

Wise Business can help you save big time on international payments.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in 40+ currencies.

Signing up to Wise Business allows access to BatchTransfer which you can use to pay up to 1000 invoices in one go. This is perfect for small businesses that are managing a global team, saving a ton of time and hassle when making payments.

Some key features of Wise Business include:

• Mid-market rate: Get the mid-market exchange rate with no hidden fees on international transfers

• Global Account: Send money to 140+ countries and hold multiple currencies, all in one place. You can also get major currency account details for a one-off fee to receive overseas payments like a local

• Access to BatchTransfer: Pay up to 1000 invoices in one click. Save time, money, and stress when you make 1000 payments in one click with BatchTransfer payments. Access to BatchTransfer is free with a Wise Business account

• Auto-conversions: Don't like the current currency exchange rate? Set your desired rate, and Wise sends the transfer the moment the rate is met

• Free invoicing tool: Generate and send professional invoices

• No minimum balance requirements or monthly fees: US-based businesses can open an account for free. Learn more about fees here

Use Wise Business >>

Final Thoughts

Navigating self-employment taxes can feel like a full-time job in itself, but staying organized from day one is the best way to protect your business. By understanding Schedule SE and staying ahead of quarterly estimated payments, you avoid the stress of surprise penalties and keep your startup’s finances on a steady growth trajectory.

Making the right choices for your tax strategy is a vital step toward longevity. For freelancers with a global reach, integrating a tool like Wise Business can simplify the "math" behind your taxes by streamlining international income and providing clear records for your USD conversions. With the right systems in place, you can spend less time on tax forms and more time building your business.

Frequently Asked Questions

Do I pay self-employment tax if I also have a W-2 job?

Yes. You owe self-employment tax on your freelance income specifically. However, your W-2 wages count toward the Social Security wage base cap ($176,100 for 2025).²

Where do I file the form?

Schedule SE is attached to your annual Form 1040. You can file electronically via tax software or through an IRS-authorized e-file provider.¹

Sources:

1. Self-employment tax (Social Security and Medicare taxes) | IRS
2. 2026 Social Security Wage Base Guide | OnPay
3. Topic no. 560, Additional Medicare tax | IRS
4. 2026 Form 1040-ES - Estimated Tax for Individuals | IRS