What type of tax is primarily for individuals who work for themselves?

• A. Self-employment tax
• B. Income tax
• C. Capital gains tax
• D. Property tax

Answer: (A)

Self-employment tax is specifically designed for individuals who are engaged in self-employment. This form of taxation primarily covers Social Security and Medicare taxes, which are usually withheld from the wages of employees by their employers. Since self-employed individuals don’t have an employer to withhold these taxes, they are responsible for paying them directly through the self-employment tax. This tax ensures that self-employed individuals contribute to the same social insurance programs as those who work for an employer, allowing them access to benefits like retirement and healthcare.

Income tax is assessed on earnings and applies whether an individual is self-employed or an employee. Capital gains tax is concerned with the profit earned from the sale of assets, and property tax is based on the value of real estate. While these types of taxes may affect self-employed individuals, they do not specifically address the unique tax responsibilities associated with self-employment, which is why self-employment tax is the correct answer.