Features

• Most taxpayers pay into the government's Social Security tax system. Typically, employers withhold this amount from an employee's paycheck and provide a matching contribution for the amount to send to the Internal Revenue Service.
  
  

Identification

• Taxpayers earning more than $400 annually must report their earnings. Self-employed taxpayers pay the IRS directly using "Schedule SE."
  
  Because self-employment taxes are borne by the employee in this situation, the employee may deduct half of the amount from his adjusted gross income. Employees of companies may not deduct these taxes because they are borne by the employer.
  
  

Size

• The self-employment and Social Security tax rate is assessed at 15.3 percent, as of 2010. Of this 15.3 percent, 12.4 percent is paid toward Social Security benefits (for disabled adults and older adults), and the remainder is used for Medicare funds (government-assisted health insurance).
  
  Taxpayers must make estimated tax payments if they typically owe money at the end of the year exceeding $1,000 in tax payments.