Self-Employment Taxes: Set It Aside

The story: Jade’s dog-walking surprise

Jade gets paid in full for dog walking through an app, then starts a tax jar for each payment.

1. Narrator: Jade walks dogs on weekends. Clients pay through an app, and nobody holds back any tax.
2. Jade: No taxes taken out means I keep all of it, right?
3. Narrator: Not quite. People who work for themselves pay their own income tax and self-employment tax.
4. Narrator: Self-employment tax covers both halves of Social Security and Medicare. It also builds Jade’s Social Security record.
5. Jade: So I set some aside from every payment, before I spend any of it.
6. Narrator: Every gig dollar: a slice for taxes.

What you’ll learn

1. Nobody holds tax back

   An employer holds back tax from each paycheck. Gig and business pay comes with nothing held back. You’re your own payroll department, so the tax is still yours to pay.

2. Self-employment tax

   Self-employment tax is Social Security and Medicare for people who work for themselves. It covers both the worker’s and the employer’s share. The rate is 15.3%, figured on most of your net earnings. It also builds your Social Security record.

3. Net earnings and filing

   Net earnings are gig income minus business costs. Net earnings of $400 or more in a year generally mean you must file. That’s true even for teens.

   Example: $900 from tutoring minus $100 for books = $800 of net earnings.

4. Set it aside, pay during the year

   Many people move a set percentage of every payment into a separate tax account or envelope. If you expect to owe enough, you may need to pay estimated taxes. They’re due April 15, June 15, September 15 and January 15.

Key words

self-employment tax

Social Security and Medicare tax for people who work for themselves

estimated taxes

tax paid in parts during the year on income with nothing held back

net earnings

gig income minus business costs

Also called: net earnings from self-employment

Common questions

Which costs can I subtract?

Costs you need for the work, like supplies or gear used for the job. Keep receipts. The full rules are on Schedule C at IRS.gov.

Remember this

Every gig dollar: a slice for taxes.

Try it: Start a tax envelope

1. Label an envelope, jar or separate account “Taxes.”
2. Run the sample month: payments of $120, $90 and $200 (example).
3. Put 25% of each payment in the envelope, then add up the envelope.

Start a tax envelope, or run the sample month of gig payments.

Live facts

Numbers that change over time, with when they were last checked and where they come from.

• Self-employment tax rate

  15.3%

  Social Security plus Medicare tax on your own net earnings (both halves)

  As of 2026

  Source: IRS.gov(opens in a new tab)

• Self-employment tax starts at

  $400of net self-employment earnings

  Below this in net earnings from your own work, no self-employment tax is due

  As of February 8, 2026

  Source: IRS.gov(opens in a new tab)

• Estimated tax due dates

  April 15, June 15, September 15 and January 15

  When people with income that has no withholding usually pay quarterly tax (dates move to the next business day on weekends and holidays)

  As of February 8, 2026

  Source: IRS.gov(opens in a new tab)