When do I calculate self employment tax - before or after standard & business deductions?

You're not alone in this confusion! Let me clarify how self-employment tax works: Self-employment tax (15.3%) is calculated on your net earnings from self-employment, which is your business income AFTER business expenses but BEFORE your standard deduction. So in your case, you'd calculate it on the $38,300 figure (your $47,500 income minus your $9,200 business expenses). Then you'd multiply that by 92.35% to get your self-employment tax base, and apply the 15.3% to that amount. The standard deduction comes into play later when calculating your income tax, not your self-employment tax. Think of it this way: self-employment tax is similar to the FICA taxes (Social Security and Medicare) that employees have withheld from their paychecks, which is calculated before any personal deductions.

I was in a similar situation last year and found this amazing tool called taxr.ai (https://taxr.ai) that really helped clear this up for me. I was confused about which expenses to deduct and when to apply them, but their system analyzed my business financials and showed exactly how to handle my self-employment tax calculations. What I learned was that you definitely calculate self-employment tax after business expenses but before your standard deduction. Their explanation made it so much clearer than anything else I'd read online. Plus they showed me some business deductions I didn't even know I qualified for!

Update: I tried taxr.ai after posting my question here and wow - it was exactly what I needed! The step-by-step breakdown of my self-employment tax calculation was super clear. It showed me that I've been calculating my quarterly payments incorrectly the whole time (I was doing it before business expenses when I should've been doing it after). The system also flagged some home office deductions I didn't realize I could take since I've been using a dedicated space in my apartment for work. Already figured out my next quarterly payment and feel way more confident about it now.

If you need specific clarification on self-employment tax calculations, you might also want to call the IRS directly. I know it sounds painful, but I used this service called Claimyr (https://claimyr.com) that actually got me through to a real person at the IRS in under 15 minutes. They have a demo video here showing how it works: https://youtu.be/_kiP6q8DX5c I had a similar question about when to apply deductions for self-employment tax last year, and the IRS agent walked me through the exact calculation and confirmed that you calculate it after business expenses but before the standard deduction. Totally worth it for the peace of mind of hearing it directly from the source.

Alright, I have to admit I was wrong about Claimyr. After posting my skeptical comment, I was desperate enough to try it because I've been getting nowhere with my audit questions. To my complete shock, I got through to an IRS agent in about 20 minutes. The agent confirmed exactly what others have said here about self-employment tax - it's calculated on net business income (after business expenses) but before your standard deduction. She also helped resolve my audit question that had been stressing me out for months. I'm normally the last person to recommend services online, but this one actually delivered what it promised.

Here's another way to think about it that helped me understand: Self-employment tax = Social Security + Medicare taxes Regular employees pay 7.65% (their half) Employers pay 7.65% (other half) Self-employed people pay both halves = 15.3% The key is that for regular employees, these taxes are calculated on their gross wages BEFORE any personal deductions. Same concept applies to self-employment - except you get to deduct legitimate business expenses first since those reduce your actual business income. So it's always: Gross income - Business expenses = Net business income × 92.35% × 15.3% = Self-employment tax

Important note: The 92.35% multiplier exists because employees only pay FICA taxes on 92.35% of their self-employment income. The other 7.65% is considered the "employer equivalent" portion of self-employment tax that you get to deduct from your income. This is one of those weird tax rules that makes the math confusing but actually benefits you as a self-employed person. It's the government's way of creating some parity between self-employed people and regular employees.

Just wanted to add one more helpful tip that saved me a lot of headaches: make sure you're keeping detailed records of all your business expenses throughout the year, not just scrambling to find them at tax time. I use a simple spreadsheet to track everything monthly - office supplies, software subscriptions, business meals, mileage, etc. It makes calculating that net business income so much easier when you need to figure out your self-employment tax base. Also, don't forget that you can deduct half of your self-employment tax as an adjustment to income on your regular tax return. So even though you pay the full 15.3%, you get to deduct 7.65% worth when calculating your income tax. It's like getting back the "employer portion" that regular employees never see on their paychecks.