Self-employment tax for farmers replaces which tax paid by employees?

• A. Medicare tax
• B. Social security tax
• C. Unemployment tax
• D. Income tax

Answer: (B)

Self-employment tax is the amount a farmer or any self-employed person pays to cover the payroll taxes that fund Social Security and Medicare for someone who isn’t an employee. It combines the employer and employee portions, so you’re paying what would normally be split between an employer and an employee. Because of that, it stands in for the Social Security tax that employees pay—and it also includes the Medicare portion as part of the same tax. Unemployment tax is a separate tax paid by employers, and income tax is a different levy altogether. So the tax referenced as replacing what employees pay is Social Security tax.