What is defined as self-employment tax?

Self-employment tax specifically refers to the tax that self-employed individuals must pay to fund Social Security and Medicare. This tax is analogous to the payroll taxes that regular employees and their employers contribute towards these social insurance programs. For self-employed individuals, they bear the full responsibility of the self-employment tax, which is calculated based on their net earnings from self-employment.

This tax allows self-employed persons to receive benefits from Social Security and Medicare upon retirement or in case of disability, ensuring that they have access to these crucial programs that are typically funded through payroll deductions for regular employees. Understanding this tax is important for anyone considering self-employment, as it directly impacts their overall tax obligations and future social security benefits.

Other options mentioned do not accurately describe self-employment tax. It is not limited to corporate income, nor is it applicable solely to dependent earnings or on all earned income regardless of employment status. The focus on funding Social Security and Medicare is what makes option C the correct and most appropriate definition.