A taxpayer who is self-employed must pay self-employment tax, according to the IRS. The tax is technically a Medicare and Social Security tax. Self-employment tax is comparable to the tax that most Americans who have jobs expect to have withheld from their paychecks. Those who are self-employed have the task of figuring their self-employment take themselves with the help of IRS Schedule SE, which is included in IRS Form 1040, also known as the "long form". Half of the self-employed individual's self-employment tax can be deducted when the time comes to figure your adjusted gross income. The self-employed tax rate has two parts to it, one for Medicare and the other part for Social Security taxes. Anyone who is self-employed and has earned more than $400 in a year from his or her work must pay self-employment tax.