According to SECA, how is self-employment income treated for determining the HI tax?

Self-employment income for the purpose of determining the Hospital Insurance (HI) tax under the Self-Employment Contributions Act (SECA) is treated as fully subject to the tax. This means that all net earnings from self-employment are counted when calculating the HI tax liability.

The HI tax is part of the Federal Insurance Contributions Act (FICA) taxes, which fund Medicare. Unlike some other tax treatments that may exclude certain types of income or limit the amount of income subject to tax, the HI tax applies to the entirety of self-employment income. This comprehensive inclusion reflects the intent of the law to ensure that all income derived from self-employment contributes to the funding of Medicare, providing coverage for health care services for seniors and certain individuals with disabilities.

Self-employed individuals must pay both the employee and employer portions of the HI tax, which reinforces the requirement that all self-employment income be reported without exclusion or limitation. This approach helps ensure that self-employed individuals are contributing their fair share to the Medicare program, similar to what employees pay through payroll deductions.