If self employed averaging about 20k a month in revenue with profit/income 10k, will SE tax apply to 20 or 10?

Question

Im just confused how SE tax works alongside self employment tax, I always here people say expect to pay 40% with SE, but 40% on what...on the entire amount of revenue (20k) or the portion left over after I pay other freelancers and materials to do the job, i.e..my net/personal income (10k). And what's up with double taxation. No clue where that comes into play. Does that only apply if I'm formally organized under some different structure other than sole prop? Thanks for any help, I've completely negelcted my taxes and just wish to brace myself for what I can expect when I seek out proper help.

Answer 1

Net earnings.

Roughly 15% of the net for SE tax.  

Roughly 15% for income tax.  (Based on brackets.  You could be less.)  Roughly 5% state income tax.

Double taxation refers to C corporations.

Answer 2

SE tax will apply to your net self earned profit (or income).

Read about self employed tax filing: http://taxipay.blogspot.com/2008/04/tax-...

Answer 3

You have net income of $10K a month, or $120K for the year.

For 2008, Social Security tax is paid on the first $102,000 of your net income.  In addition, Medicare tax of 2.9% is paid on all of your net income.

Your Social Security tax will be slightly more than $14,000, and your Medicare tax will be about $3,600.

As a sole proprietor you pay both employee and employer shares of these taxes.