SECA: Self-Employed Contributions Act

In 1951, the Self-Employment Contributions Act (SECA) extended coverage under the social security system to the self-employed.

SECA uses an individuals self-employment income as the basis for levying taxes and for determining the amount of income to credit toward OASDI insurance benefits or HI coverage. Self-employment income generally consists of the net earnings derived by individuals from a business or profession carried on as a sole proprietorship or as a partnership. Self-employed persons determine their net earnings by finding the sum of the following:

1. Gross income
2. Distributive share

Tackle It

Using the information provided here and in your text, complete the following:

1. Gross income is defined as income derived from by the individual, less allowable deductions.
2. , the distributive share is the ordinary net income or loss from any business or profession carried on by .
3. The self-employed OASDI tax rate for 2019 is in decimal format or %.
4. The self-employed HI tax rate for 2019 is in decimal format or %.
5. Self-employment income subject to a supplemental HI tax of % for earned income in excess of $ for individuals whose filing status is Single.
6. True or False: If the individual is also an employee of another company, the wages received will not reduce the amount of self-employment income that is taxed for OASDI.
7. Earnings of less than $ from self-employment are ignored.