You are considered to be self-employed, and subject to the self-employment tax, when you:
Carry on a trade or business as a sole proprietor or an independent contractor,
Are a member of a partnership that carries on a trade or business, or
Are otherwise in business for yourself.
If you are carrying on an activity for a livelihood, and your intention is to make a profit, you are in a trade or business. The fact that you do not actually make a profit does not mean that you are not in a trade or business.
You do not have to carry on regular full-time business activities to be self-employed. If you have a part-time business in addition to a regular job, you are still considered to be self-employed in your part-time business.
For self-employment tax purposes, you are an independent contractor if the person or company you work for has the right to control or direct only the results of your work and not how you do it. Independent contractors include professionals and others who provide services to clients and charge for their services on a fee or other basis. They are not contracted as employees and do not have social security and Medicare tax withheld from the pay they receive for their services.
If your earnings from self-employment are low, but you don’t want this to prevent you from obtaining the required number of credits to ensure your social security benefits when you retire, there are optional methods of calculating the self-employment tax, which are discussed below.