Business FinancesQuestion 1159 of 1605
Self-employment tax paid by a sole proprietor covers:
a.The contractor's bond premium
b.Social Security and Medicare contributions
c.California sales tax
d.Federal unemployment insurance only
Explanation
Self-employment tax funds the owner's Social Security and Medicare, covering both the employer and employee shares (15.3% up to the Social Security wage base) because a self-employed person has no employer to pay half. It is separate from income tax.
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)