Self Employment and Payroll Taxes - Explained

The video explains the differences and similarities between self-employment and payroll taxes. It highlights that self-employed individuals must pay the full amount of FICA taxes, which include Social Security and Medicare, while employees share this responsibility with their employers. Employers may also have additional tax obligations such as unemployment taxes and workers' compensation. The video emphasizes the importance of understanding these tax responsibilities for both self-employed individuals and employers.

What is the primary difference in tax responsibility between self-employed individuals and employees?

• Self-employed individuals pay no taxes.

• Employees pay all taxes themselves.

• Self-employed individuals pay the full FICA taxes themselves.

• Employees pay the full FICA taxes themselves.

How are FICA taxes typically divided between an employee and their employer?

• The employee and employer each pay half.

• The employer pays all, and the employee pays none.

• The employee pays more than the employer.

• The employee pays all, and the employer pays none.

What must self-employed individuals do regarding their FICA taxes?

• They must pay the entire amount themselves.

• They pay only Social Security taxes.

• They pay only Medicare taxes.

• They pay no FICA taxes.

Which of the following is an additional tax obligation that employers might have beyond payroll taxes?

• Sales taxes

• Property taxes

• Luxury taxes

• Federal unemployment taxes

What is required of anyone earning income in terms of taxes?

• They must pay only state taxes.

• They must pay Social Security and Medicare taxes.

• They only pay taxes if they are self-employed.

• They are exempt from all taxes.