self-employment tax

When someone works as an independent contractor or on odd jobs, they have to pay self-employment tax in addition to regular income tax.

The self-employment tax is basically Medicare and Social Security tax payments. It is currently 15.3% (in 2009).

Regular employees have their Medicare and Social Security paid by their employer. A self-employed person has to pay for these things on their own.

If you're self-employed, you need to always figure in the self-employment tax into your hourly rate.