Self-employment tax is the 15.3 percent Social Security and Medicare tax on net earnings from self-employment, owed in addition to income tax by sole proprietors, contractors, and business miners and validators.
It applies to net profit on Schedule C, computed on Schedule SE, with half deductible against income tax. Investors are not subject to it; a trading or mining business is.
Why it matters: the hobby-versus-business classification changes whether this tax applies at all. See Schedule C.
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