This Act requires self-employed business owners to pay the same total tax rates for social security and Medicare taxes that are split between employees and employers under the Federal Insurance Contributions Act. One is never forced to pay under both FICA and SECA – only one applies in any given situation.
The taxes only apply if one’s total annual self-employed income is greater than $400, in which case the tax must be applied to all income up to a maximum annual limit of $84,900. Also, some deductions are allowed from business income before the tax is calculated. These deductions include income from interest and dividends, the sale of business property or other assets, and rental income from real estate or personal property (though these deductions do not apply if the generation of these types of income comprises one’s core business activity).