Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International


Self-Employment Tax

Who Must Pay?

Net Earnings

Taxpayers with net earnings from self-employment of $400 or more must pay self-employment tax.

Profit Motive

Taxpayers are subject to self-employment tax when they have a trade or business operating with the intention of making a profit. A profit does not actually have to be made each year as long as there is a profit motive.

To determine whether a trade or business is operating for profit, consider the:

  • Regularity of the activities and transactions
  • Production of income