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The self-employment tax rate is 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).
What percent do independent contractors pay in taxes? The self-employment tax rate is 15.3%, of which 12.4% goes to Social Security and 2.9% goes to Medicare. Income tax obligations vary based on net business profits and losses, among other factors.
The W-2 and W-4 forms only apply to employees, not independent contractors. Small business owners should know how to complete these forms and when to issue them to remain in compliance with the IRS.
There is no W-2 self-employed specific form that you can create. Instead, you must report your self-employment income on Schedule C (Form 1040) to report income or (loss) from any business you operated or profession you practiced as a sole proprietor in which you engaged for profit.
You do not generally have to withhold or pay any taxes on payments to independent contractors unless you are not provided with a required taxpayer identification number or are instructed to withhold by the Internal Revenue Service.