Money Map Tip of the Week

On October 24, 2026, in Latest News, by The Somerville Times

Q: Is my federal income tax return (Form 1040) used only to calculate federal income taxes?

A: No. Your federal tax return can also calculate other taxes, including Social Security and Medicare taxes for people who are self-employed.

With more people earning money through gig work, freelancing, and small businesses, understanding self-employment tax is increasingly important.

* Self-employment tax is separate from federal income tax. It covers Social Security and Medicare taxes on earnings from self-employment. For many self-employed taxpayers, this tax can actually represent the largest portion of their total federal tax liability!

* Self-employed people pay both portions. When you work for an employer, you and your employer each pay a share of Social Security and Medicare taxes. When you work for yourself, you’re responsible for both shares.

* The amount can be substantial. For many self-employed taxpayers, self-employment tax amounts to approximately 14% of net business earnings, in addition to any regular federal income tax owed.Bottom Line: Your federal tax return isn’t just about income tax. If you’re self-employed, Social Security and Medicare taxes may actually account for most of your federal tax liability—even when you owe relatively little regular federal income tax. Understanding this obligation can help you avoid an unexpected tax bill.

Any questions? I’m Vincent Hicks, a CPA based in the Cambridge–Somerville area. Reach out at vincent@hickscpasolutions.com or (859) 553-0788.

Disclaimer: This column provides general financial information and should not be considered legal, investment, or tax advice. Always consult a qualified professional for personal guidance.