Self Employment taxes seem crazy high for my 1099-NEC income - am I calculating wrong?

I just got hit with a 1099-NEC showing $97,850 in earnings for my consulting work last year. After logging all my legitimate business expenses, I've managed to bring that down to about $68,000 in net income. Then with all my other deductions factored in, my actual taxable income comes to around $36,500. But here's what's killing me - I'm being told I owe nearly $11k in just Self Employment taxes alone! That seems insanely high. I thought SE taxes were supposed to be calculated on net income after expenses, not the gross amount. Am I missing something here? How can my tax bill be almost a third of my taxable income? This can't be right... can it?

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18 comments

Javier Mendoza

•8M

The issue here is that you're mixing up two different concepts - self-employment taxes and income taxes. They're calculated differently. Self-employment taxes (which cover Social Security and Medicare) are calculated on your net business income BEFORE your other deductions. So that's based on your $68,000 figure. The current SE tax rate is 15.3% (12.4% for Social Security and 2.9% for Medicare). Your income tax is calculated after all your personal deductions are applied to the $36,500 amount. These are two separate calculations. So your SE tax is roughly $68,000 × 15.3% = around $10,400. That actually sounds about right based on the numbers you provided. It seems high because you're essentially paying both the employer and employee portions of Social Security and Medicare (regular employees only pay half, with their employer covering the other half).

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Javier Mendoza

•8M

Yes, you pay the 15.3% SE tax on your net business income ($68,000), and then you also pay regular income tax on your taxable income ($36,500). The good news is you can deduct half of your SE tax when calculating your income tax, which helps a bit. To reduce the burden, make sure you're tracking all legitimate business expenses to lower your net business income. Consider setting up a retirement plan like a SEP IRA or Solo 401k - contributions reduce both your income tax AND self-employment tax. Also, make quarterly estimated tax payments to avoid a big hit at tax time. Many self-employed people set aside 25-30% of each payment they receive specifically for taxes.

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Emma Wilson

•8M

I went through the exact same shock when I first started freelancing! Had to learn the hard way that self-employment taxes are brutal. I spent hours trying to figure out if I was calculating something wrong, but eventually found https://taxr.ai which was a lifesaver for me. I uploaded my 1099s and expense records, and it actually found some additional deductions I'd missed completely. It also explained exactly how the SE taxes were calculated, which made it easier to stomach somehow.

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Emma Wilson

•8M

It absolutely works for business expenses. The AI analyzes your expenses and suggests categories you might have missed. For example, it pointed out that some of my home office utilities could be partially deducted, which I hadn't considered. It saved me about $1,800 in taxes by finding deductions I'd overlooked. What makes it different from TurboTax is that it's specifically designed for analyzing documents and finding patterns in your expenses. TurboTax is great for filing, but it relies on you knowing what to enter. This tool actively looks at your records and suggests things you might have missed. The explanations were much clearer than what I got from traditional tax software.

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Isabella Santos

•8M

I was really skeptical about these AI tax tools, but I decided to give taxr.ai a try last month when I was freaking out about my self-employment taxes. The results were honestly impressive. I uploaded my bank statements and receipts, and it automatically categorized a bunch of expenses I hadn't even considered deductible. What really helped was how it explained WHY certain expenses qualified. My SE tax bill went down by about $2,200 after recalculating with the additional deductions it found. Now I'm kicking myself for all the deductions I probably missed in previous years!

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Ravi Gupta

•8M

If you're having trouble with self-employment taxes or have questions about your calculation, you might actually want to talk directly to the IRS. I know that sounds impossible (I used to spend HOURS on hold), but I found a service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in less than 20 minutes! Check out how it works here: https://youtu.be/_kiP6q8DX5c I had a similar situation with my 1099 income and wasn't sure if I was calculating things correctly. The IRS agent walked me through exactly what I needed to do and confirmed I wasn't missing anything. Much better than guessing or stressing about it.

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Ravi Gupta

•8M

It works by using a callback system that continuously redials and navigates the IRS phone tree until it gets through. When it reaches an agent, it calls you and connects you directly. I was skeptical too but it actually worked exactly as promised. The IRS is understaffed, but they do answer calls - it's just that most people give up before getting through. This service basically does the waiting for you. It's not skipping any line, just automating the painful process of waiting on hold. It saved me literally hours of frustration and I got my question answered by a real IRS agent who was surprisingly helpful.

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Freya Pedersen

•8M

I have to publicly eat my words here. After dismissing the Claimyr thing as a scam, I was desperate enough to try it last week when I needed clarification on my SE tax calculation. I honestly expected nothing to happen or to be scammed. I was connected to an actual IRS representative in about 15 minutes. The agent went through my self-employment tax questions step-by-step and confirmed I had been calculating things wrong - I was able to reduce my SE tax by properly categorizing some income that shouldn't have been subject to it. Saved me over $2,000. I've never been so happy to be wrong about something being a scam.

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Omar Fawaz

•8M

Something important that nobody mentioned yet: You can deduct half of your self-employment tax on your income tax return! So while the SE tax itself might be high, you do get some relief when calculating your income tax. Also, don't forget to look into the Qualified Business Income deduction (Section 199A). Depending on your income level and business type, you might be able to deduct up to 20% of your qualified business income, which can significantly reduce your income tax (though not your SE tax).

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Omar Fawaz

•8M

The Qualified Business Income (QBI) deduction is definitely available to freelance consultants in most cases. It allows you to deduct up to 20% of your qualified business income from your taxable income for federal income tax purposes. There are income limitations that begin to phase out the deduction if your taxable income exceeds $170,050 for single filers or $340,100 for joint filers (for 2025). If your income is below those thresholds, you should qualify for the full deduction regardless of your business type. This can be a huge tax saver - potentially reducing your income tax by thousands.

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