Self-Employment (FICA) Tax & Section 199A QBI Deduction

Independent contractors and sole proprietors report business profit on IRS Schedule C and pay self-employment tax on Schedule SE:

Self-Employment Tax (15.3%): Composed of 12.4% Social Security tax (capped at the 2026 wage base of $184,500) and 2.9% Medicare tax. Contractors pay both employer and employee portions.
Above-the-Line Deduction: You can deduct 50% of your self-employment tax directly from gross income.
Section 199A QBI: Eligible pass-through business owners may deduct up to 20% of qualified business income from taxable income.