Quick answer

If you work for yourself (sole proprietor, independent contractor, gig worker) and your net self-employment earnings are $400 or more, you generally use Schedule SE with your Form 1040 to compute self-employment tax. If you have employees, you generally file Form 941 quarterly to report withheld federal income tax and payroll taxes (unless the IRS tells you to file Form 944 annually). (IRS: About Schedule SE; IRS: About Form 941)

When to use Schedule SE

  • Who files: Individuals who earn self-employment income (sole proprietors, many LLC members, freelancers, gig workers). See IRS guidance for specifics. (IRS: About Schedule SE)
  • Why: Schedule SE calculates the Social Security and Medicare tax you owe on net self-employment income — it covers both the employee and employer portions of FICA for self-employed taxpayers.
  • Timing: Schedule SE is filed with your annual Form 1040/1040-SR.

When to use Form 941

  • Who files: Employers who pay wages to employees and withhold federal income tax or Social Security/Medicare taxes. Most employers file quarterly using Form 941; very small employers may be instructed to file Form 944 annually. (IRS: About Form 941; IRS: About Form 944)
  • Why: Form 941 reports federal income tax withheld, the employee and employer shares of Social Security and Medicare taxes, and any adjustments or credits for the quarter.
  • Timing: Form 941 is due the last day of the month following the end of each quarter (April 30, July 31, Oct 31, Jan 31).

Practical examples

  • Freelancer example: A freelance designer reports 1099-NEC income and business expenses on Schedule C, then uses Schedule SE to calculate self-employment tax due on net profit. You pay these taxes with your annual return and through estimated tax payments during the year if needed.
  • Small employer example: A bakery with five employees withholds income tax and payroll taxes from paychecks and files Form 941 each quarter to report amounts withheld and employer tax liabilities. The bakery also follows deposit schedule rules for payroll tax deposits to avoid penalties.

Common mistakes to avoid

  • Mixing roles: Treating yourself as an employee on your own Schedule SE — if you’re an employee of your corporation, payroll taxes are handled on payroll and reported by the employer, not via Schedule SE.
  • Missing the $400 rule: Net self-employment earnings of $400 or more generally trigger Schedule SE — below that, you normally won’t owe self-employment tax. (IRS: About Schedule SE)
  • Ignoring Form 944 notices: Small employers may receive IRS notice to file Form 944 instead of 941; file what the IRS instructs.
  • Late deposits and filings: Penalties and interest apply for late deposits or late Form 941 filings; follow the IRS deposit schedules closely.

Professional tips

  • Reconcile payroll records each quarter before filing Form 941 to avoid corrections. See our guide on how to file Form 941 for step-by-step help.
  • Keep clear separation between personal and business income and use Schedule C to report self-employment profit or loss before calculating Schedule SE.
  • If you’re unsure whether you’re an employee or independent contractor, document the working relationship and consider consulting a tax pro — misclassification can trigger back taxes and penalties.

Internal resources

Authoritative sources

Disclaimer

This article is educational and reflects guidance current as of 2025. It is not individualized tax advice. For advice tailored to your facts, consult a qualified tax professional or the IRS directly.

About the author

As a tax practitioner with 15+ years helping individuals and small businesses, I’ve seen the filing consequences when people mix up self-employment vs employer reporting. Accurate classification and timely filing reduce penalties and keep records audit-ready.