I am asking this question as a true sole proprietor that has no other income from a second job or previous employer. As I understand it FICA taxes is an easier way to refer to your Social Security Tax and Medicare Tax in one. I also know that I can, and should, make estimated tax payments towards this throughout the year through EFTPS.

Is FICA all I need to worry about as a sole proprietor? Meaning, when I fill my 1040 for the year is this what I am paying taxes for; minus any individual State taxes I might be required to pay.


Do I pay FICA and Federal Taxes on my income? Is FICA really my Federal Taxes in this case? I think I am mixing up my terminology here.

Bonus Question
Other people who find this post may benefit if you can cover this question as well:

Does any of this process or information change if I work as a sole proprietor and have a second job with an employer?

UPDATE - Clarifying question & answer for future users

As a sole proprietor with no other income you need to pay taxes on FICA (Social Security and Medicare) plus Federal Income Tax. So you should always depending on your tax bracket and not accounting for State Taxes withhold a percentage of your income to insure you always pay the correct amount of taxes including any unforeseen taxes; like crossing the threshold into a higher tax bracket. This is why briantist's answer mentions 35% for his personal circumstances and why for me this currently is about 15% - 20%. Your mileage (amount you withhold) may vary.

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    Are you asking whether FICA is the same as your income tax? "Federal tax" just means any tax levied by the federal government; there are many different federal taxes.
    – BrenBarn
    Commented Jul 16, 2015 at 1:14

1 Answer 1


FICA taxes are separate from federal and state income taxes. As a sole proprietor you owe all of those.

Additionally, there is a difference with FICA when you are employed vs. self employed.

Typically FICA taxes are actually split between the employer and the employee, so you pay half, they pay half. But when you're self employed, you pay both halves. This is what is commonly referred to as the self employment tax.

If you are both employed and self employed as I am, your employer pays their portion of FICA on the income you earn there, and you pay both halves on the income you earn in your business.

Edit: As @JoeTaxpayer added in his comment, you can specify an extra amount to be withheld from your pay when you fill out your W-4 form. This is separate from the calculation of how much to withhold based on dependents and such; see line 6 on the linked form. This could allow you to avoid making quarterly estimated payments for your self-employment income.

I think this is much easier when your side income is predictable. Personally, I find it easier to come up with a percentage I must keep aside from my side income (for me this is about 35%), and then I immediately set that aside when I get paid. I make my quarterly estimated payments out of that money set aside.

My side income can vary quite a bit though; if I could predict it better I would probably do the extra withholding.

Regarding your follow up:

Yes, you need to pay taxes for FICA and federal income tax.

I can't say exactly how much you should withhold though. If you have predictable deductions and such, it could be lower than you expect. I'm not a tax professional, and when it comes doing business taxes I go to someone who is. You don't have to do that, but I'm not comfortable offering any detailed advice on how you should proceed there.

I mentioned what I do personally as an illustration of how I handle withholding, but I can't say that that's what someone else should do.

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    The only thing I'd consider adding - W2 employment may provide an opportunity to withhold enough federal tax so quarterly payment on SE income aren't required. Commented Jul 16, 2015 at 3:02
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    Also the Social Security cap currently $118.5k is for FICA (payroll) and SECA (self-employed) income combined. If you have that much from employment alone, you pay no SS for self-employed (but do pay Medicare which has no cap); if employment + self-employed exceed that amount, you only pay on part of self-employed. Commented Jul 16, 2015 at 12:07
  • @briantist I have updated my post with a follow up question/ reasoning. Is this correct then? Commented Jul 16, 2015 at 17:04
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    @Blizzardengle, I updated the answer.
    – briantist
    Commented Jul 16, 2015 at 17:13
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    Note also that the taxes are on net income, not gross, so if you have expenses to deduct that can reduce the amount considerably. See IRS Schedule C and Form 8829, among others.
    – jamesqf
    Commented Jul 16, 2015 at 22:09

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