In Oregon, individuals operating their own businesses or working as independent contractors are subject to a combined state and federal levy covering Social Security and Medicare. This levy, often overlooked by those new to self-employment, functions similarly to the taxes withheld from the paychecks of traditionally employed individuals. For example, a freelance writer in Portland would be responsible for paying these taxes on their earnings.
Accurate and timely payment of these combined taxes is crucial for maintaining eligibility for future Social Security and Medicare benefits, including retirement income, disability coverage, and healthcare services. Historically, this combined tax structure has evolved to provide a safety net for individuals who might otherwise lack access to these vital programs through traditional employment. Failing to remit these payments can lead to penalties and complications with benefit eligibility.
