So what’s the difference? In short, your income tax is assessed on your total income for the year, whereas self-employment tax is assessed on your business income for the year.
Self-employed individuals have to pay both income tax and self-employment taxes. It seems like it should be an either or situation, right? Many freelancers are surprised to learn they have to pay multiple types of taxes on their return. That’s your gross income minus your business write-offs. Luckily, only your net earnings are subject to self employment taxes.