Self-employment tax for US AI training contractors

Why contractors pay it

AI training platforms pay you as an independent contractor, so nothing comes out of your pay for Social Security or Medicare. The IRS collects those through self-employment tax, which it describes as "a tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves", similar to the taxes withheld from most wage earners' pay.

The IRS self-employed tax center counts you as self-employed if you work as an independent contractor or are "otherwise in business for yourself", including part-time and as a gig worker. Platforms say the same thing from their side: our guide to how you actually get paid quotes Mercor's statement that it does not withhold tax, and Outlier's terms say the same, as covered in how Outlier pays.

The rate and the threshold

The IRS page on self-employment tax gives the figures:

• The rate is 15.3 percent: 12.4 percent for Social Security and 2.9 percent for Medicare
• You must pay it if your net earnings from self-employment were $400 or more
• The Social Security part stops at a yearly cap; the 2025 Schedule SE instructions put it at $176,100 of combined wages and self-employment income
• An additional 0.9 percent Medicare tax applies above a threshold that depends on filing status ($200,000 for single filers and $250,000 for married couples filing jointly)

Both the threshold and the tax work on net earnings. The Schedule SE instructions say that in most cases these include your net profit from the business, which is not the same as the gross total in your payout history.

Schedule SE

The form is Schedule SE, filed with your Form 1040. In the IRS's words: "If you have earnings subject to self-employment tax, use Schedule SE to figure your net earnings from self-employment."

The same IRS page says you can deduct the employer-equivalent portion of your self-employment tax when you work out your adjusted gross income. It adds that "this deduction only affects your income tax" and does not change your self-employment tax.

For the forms a platform may send you at year end, see 1099-NEC vs 1042-S.

Paying during the year

With nothing withheld, the IRS expects you to pay as you go. Its estimated taxes page says individuals generally have to make estimated payments if they expect to owe $1,000 or more when they file. The year is split into four payment periods, each with its own due date, and the IRS warns that underpaying can bring a penalty "even if you are due a refund" when you file. The worksheet for working out whether you need to pay is in Form 1040-ES.

If you are not a US resident

This guide is for US residents. The Schedule SE instructions say a self-employed nonresident alien living in the US must pay self-employment tax if an international social security agreement places them under the US system, and then files Schedule SE with Form 1040-NR. For the rules that usually matter more to non-US contractors, read why US platforms withhold tax from non-US contractors.

Everything above describes how the IRS explains these rules, read on irs.gov on 12 October 2026. Check your own situation with a tax professional.

Labeling Jobs does not give financial or tax advice.