DOES THE 2% PAYROLL TAX HOLIDAY AFFECT THE SELF EMPLOYED?

Q. I am self employeed. I understand that employees do not have to pay the full Social Security tax of 6.2% they only have to pay 4.2% for 2011. Does that apply to me as a self employed person?

A. I have received a number of questions about the Payroll Tax Holiday and how it applies to those who are self-employed. The short answer to this is "yes" it does apply to people that have self employement income. Instead of paying the full 15.3% Social Security and Medicare tax you will only have to pay 13.3%.

I recommend that you consider how this will impact your estimated tax payments for 2011.