Do self-employed persons who also work as employees have to pay FICA taxes on their net self-employment earnings?

Self-employed individuals who also work as employees are indeed subject to FICA taxes, but the approach to how these taxes are calculated differs based on their earnings from each category. FICA taxes, which include Social Security and Medicare taxes, are primarily assessed on wages earned as an employee. However, when a person is self-employed, they must pay self-employment tax on their net earnings from self-employment.

In a situation where an individual receives W-2 wages as an employee, those earnings are already subject to FICA taxes, typically withheld by the employer. Moreover, net self-employment income is also liable for self-employment tax, which parallels the FICA tax but is filed separately on the individual's tax return.

Thus, while self-employed people who are also employees don't directly pay FICA on their net self-employment earnings per se, they still contribute to the Social Security and Medicare systems through self-employment taxes based on their net self-employment income. Understanding the distinction between these roles helps clarify tax responsibilities.

In this case, option B correctly reflects that while self-employed individuals have a responsibility toward paying taxes, the manner in which FICA taxes directly impact their net self-employment earnings depends on their employment status and how taxes are assessed