In computing your Self-Employment Contributions Act (SECA) tax, the Medicare portion of the tax is imposed on 2.9% of all your net business income, with no upper limit.

The Social Security portion of the tax is 12.4%, but it only applies to the first $80,400 you earned in 2001, and the first $84,900 you earn in 2002. This dollar amount increases every year to reflect increases in the average American wage.

For purpose of determining whether you meet the $84,900 ceiling, only your own earnings - and not those of your spouse - are counted.

If you have earnings from a regular job, or perhaps more than one job, your employer will automatically be withholding FICA tax on your wages. Your wages, salary, bonus, tips, etc. earned on the job will count towards the $84,900 amount, and at most your SECA tax will apply to the difference.

Overpayments of FICA tax. If you had more than one job during 2001, and the total of all your income from those jobs added up to more than $80,400, you don't need to pay any SECA tax on your self-employment income. What's more, it's likely that too much social security tax has been withheld from your paychecks.

Take a look at the amount in Box 4 on all of your W-2 Forms. If you add them up and the sum is more than $4,984.80 ($80,400 x 6.2%) in 2001, you've paid too much tax. The overpayment (what you've paid, minus the maximum dollar amount) can be claimed as a subtraction from your tax bill on Line 62 of Form 1040. You cannot use Form 1040EZ or Form 1040A to claim this overpayment