Social security tax is paid by workers and employers on wages earned that supports the benefit programs under the social security.
It is paid so as to support government programs in our society.
The Social Security tax rate in the United States is currently 12.4%, but only half of this amount is paid by employees, with the other half paid by the employer.
If you’re self-employed however, you pay the entire social security tax as part of your self-employment tax.
Formula to calculate social security tax.
Suppose the taxable income of a self employed trader is $700, calculate his social security.
Since the trader is self employed therefore, his tax rate will be 12.4%.
Therefore, his social security tax is $84.