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2010 Tax Forms 1040ez

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2010 Tax Forms 1040ez

2010 tax forms 1040ez Publication 936 - Introductory Material Table of Contents Reminders IntroductionOrdering forms and publications. 2010 tax forms 1040ez Tax questions. 2010 tax forms 1040ez Useful Items - You may want to see: Reminders Future developments. 2010 tax forms 1040ez  For the latest information about developments related to Publication 936, Home Mortgage Interest Deduction, such as legislation enacted after it was published, go to www. 2010 tax forms 1040ez irs. 2010 tax forms 1040ez gov/pub936. 2010 tax forms 1040ez Photographs of missing children. 2010 tax forms 1040ez  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. 2010 tax forms 1040ez Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. 2010 tax forms 1040ez You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. 2010 tax forms 1040ez Introduction This publication discusses the rules for deducting home mortgage interest. 2010 tax forms 1040ez Part I contains general information on home mortgage interest, including points and mortgage insurance premiums. 2010 tax forms 1040ez It also explains how to report deductible interest on your tax return. 2010 tax forms 1040ez Part II explains how your deduction for home mortgage interest may be limited. 2010 tax forms 1040ez It contains Table 1, which is a worksheet you can use to figure the limit on your deduction. 2010 tax forms 1040ez Comments and suggestions. 2010 tax forms 1040ez   We welcome your comments about this publication and your suggestions for future editions. 2010 tax forms 1040ez   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. 2010 tax forms 1040ez NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. 2010 tax forms 1040ez Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. 2010 tax forms 1040ez   You can send your comments from www. 2010 tax forms 1040ez irs. 2010 tax forms 1040ez gov/formspubs. 2010 tax forms 1040ez Click on “More Information” and then on “Comment on Tax Forms and Publications. 2010 tax forms 1040ez ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. 2010 tax forms 1040ez Ordering forms and publications. 2010 tax forms 1040ez   Visit www. 2010 tax forms 1040ez irs. 2010 tax forms 1040ez gov/formspubs to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. 2010 tax forms 1040ez Internal Revenue Service 1201 N. 2010 tax forms 1040ez Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. 2010 tax forms 1040ez   If you have a tax question, check the information available on IRS. 2010 tax forms 1040ez gov or call 1-800-829-1040. 2010 tax forms 1040ez We cannot answer tax questions sent to either of the above addresses. 2010 tax forms 1040ez Useful Items - You may want to see: Publication 523 Selling Your Home 527 Residential Rental Property 530 Tax Information for Homeowners 535 Business Expenses   See How To Get Tax Help near the end of this publication, for information about getting these publications. 2010 tax forms 1040ez Prev  Up  Next   Home   More Online Publications
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The 2010 Tax Forms 1040ez

2010 tax forms 1040ez 12. 2010 tax forms 1040ez   Self-Employment Tax Table of Contents What's New for 2013 What's New for 2014 Introduction Topics - This chapter discusses: Useful Items - You may want to see: Why Pay Self-Employment Tax? How To Pay Self-Employment TaxReplacing a lost social security card. 2010 tax forms 1040ez Name change. 2010 tax forms 1040ez Penalty for underpayment of estimated tax. 2010 tax forms 1040ez Who Must Pay Self-Employment Tax?Limited partner. 2010 tax forms 1040ez Community property. 2010 tax forms 1040ez Figuring Self-Employment EarningsLandlord Participation in Farming Methods for Figuring Net EarningsRegular Method Farm Optional Method Nonfarm Optional Method Using Both Optional Methods Reporting Self-Employment Tax What's New for 2013 Tax rates. 2010 tax forms 1040ez  For tax years beginning in 2013, the social security part of the self-employment tax increases from 10. 2010 tax forms 1040ez 4% to 12. 2010 tax forms 1040ez 4%. 2010 tax forms 1040ez The Medicare part of the tax remains at 2. 2010 tax forms 1040ez 9%. 2010 tax forms 1040ez As a result, the self-employment tax is increased from 13. 2010 tax forms 1040ez 3% to 15. 2010 tax forms 1040ez 3%. 2010 tax forms 1040ez Additional Medicare Tax. 2010 tax forms 1040ez . 2010 tax forms 1040ez  For tax years beginning in 2013, a 0. 2010 tax forms 1040ez 9% Additional Medicare Tax applies to your Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income above a threshold amount. 2010 tax forms 1040ez Use Form 8959, Additional Medicare Tax, to figure this tax. 2010 tax forms 1040ez For more information, see the Instructions for Form 8959. 2010 tax forms 1040ez Maximum net earnings. 2010 tax forms 1040ez  The maximum net self-employment earnings subject to the social security part (12. 2010 tax forms 1040ez 4%) of the self-employment tax increased to $113,700 for 2013. 2010 tax forms 1040ez There is no maximum limit on earnings subject to the Medicare part (2. 2010 tax forms 1040ez 9%). 2010 tax forms 1040ez What's New for 2014 Maximum net earnings. 2010 tax forms 1040ez  The maximum net self-employment earnings subject to the social security part of the self-employment tax for 2014 will be discussed in the 2013 Publication 334. 2010 tax forms 1040ez Introduction Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. 2010 tax forms 1040ez It is similar to the social security and Medicare taxes withheld from the pay of most wage earners. 2010 tax forms 1040ez You usually have to pay SE tax if you are self-employed. 2010 tax forms 1040ez You are usually self-employed if you operate your own farm on land you either own or rent. 2010 tax forms 1040ez You have to figure SE tax on Schedule SE (Form 1040). 2010 tax forms 1040ez Farmers who have employees may have to pay the employer's share of social security and Medicare taxes, as well. 2010 tax forms 1040ez See chapter 13 for information on employment taxes. 2010 tax forms 1040ez Self-employment tax rate. 2010 tax forms 1040ez   For tax years beginning in 2013, the self-employment tax rate is 15. 2010 tax forms 1040ez 3%. 2010 tax forms 1040ez The rate consists of two parts: 12. 2010 tax forms 1040ez 4% for social security (old-age, survivors, and disability insurance) and 2. 2010 tax forms 1040ez 9% for Medicare (hospital insurance). 2010 tax forms 1040ez Topics - This chapter discusses: Why pay self-employment tax How to pay self-employment tax Who must pay self-employment tax Figuring self-employment earnings Landlord participation in farming Methods for figuring net earnings Reporting self-employment tax Useful Items - You may want to see: Publication 541 Partnerships Form (and Instructions) 1040 U. 2010 tax forms 1040ez S. 2010 tax forms 1040ez Individual Income Tax Return Sch F (Form 1040) Profit or Loss From Farming Sch SE (Form 1040) Self-Employment Tax 1065 U. 2010 tax forms 1040ez S. 2010 tax forms 1040ez Return of Partnership Income Sch K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. 2010 tax forms 1040ez See chapter 16 for information about getting publications and forms. 2010 tax forms 1040ez Why Pay Self-Employment Tax? Social security benefits are available to self-employed persons just as they are to wage earners. 2010 tax forms 1040ez Your payments of SE tax contribute to your coverage under the social security system. 2010 tax forms 1040ez Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. 2010 tax forms 1040ez How to become insured under social security. 2010 tax forms 1040ez   You must be insured under the social security system before you begin receiving social security benefits. 2010 tax forms 1040ez You are insured if you have the required number of credits (also called quarters of coverage). 2010 tax forms 1040ez Earning credits in 2013. 2010 tax forms 1040ez   You can earn a maximum of four credits per year. 2010 tax forms 1040ez For 2013, you earn one credit for each $1,160 of combined wages and self-employment earnings subject to social security tax. 2010 tax forms 1040ez You need $4,640 ($1,160 × 4) of combined wages and self-employment earnings subject to social security tax to earn four credits in 2013. 2010 tax forms 1040ez It does not matter whether the income is earned in 1 quarter or is spread over 2 or more quarters. 2010 tax forms 1040ez For an explanation of the number of credits you must have to be insured and the benefits available to you and your family under the social security program, consult your nearest Social Security Administration (SSA) office or visit the SSA website at www. 2010 tax forms 1040ez socialsecurity. 2010 tax forms 1040ez gov. 2010 tax forms 1040ez Making false statements to get or to increase social security benefits may subject you to penalties. 2010 tax forms 1040ez The Social Security Administration (SSA) time limit for posting self-employment earnings. 2010 tax forms 1040ez   Generally, the SSA will give you credit only for self-employment earnings reported on a tax return filed within 3 years, 3 months, and 15 days after the tax year you earned the income. 2010 tax forms 1040ez    If you file your tax return or report a change in your self-employment earnings after the SSA time limit for posting self-employment earnings, the SSA may change its records, but only to remove or reduce the amount. 2010 tax forms 1040ez The SSA will not change its records to increase your self-employment earnings after the SSA time limit listed above. 2010 tax forms 1040ez How To Pay Self-Employment Tax To pay SE tax, you must have a social security number (SSN) or an individual taxpayer identification number (ITIN). 2010 tax forms 1040ez This section explains how to: Obtain an SSN or ITIN, and Pay your SE tax using estimated tax. 2010 tax forms 1040ez An ITIN does not entitle you to social security benefits. 2010 tax forms 1040ez Obtaining an ITIN does not change your immigration or employment status under U. 2010 tax forms 1040ez S. 2010 tax forms 1040ez law. 2010 tax forms 1040ez Obtaining a social security number. 2010 tax forms 1040ez   If you have never had an SSN, apply for one using Form SS-5, Application for a Social Security Card. 2010 tax forms 1040ez The application is also available in Spanish. 2010 tax forms 1040ez You can get this form at any Social Security office or by calling 1-800-772-1213. 2010 tax forms 1040ez    You can also download Form SS-5 from the Social Security Administration website at  www. 2010 tax forms 1040ez socialsecurity. 2010 tax forms 1040ez gov. 2010 tax forms 1040ez   If you have a social security number from the time you were an employee, you must use that number. 2010 tax forms 1040ez Do not apply for a new one. 2010 tax forms 1040ez Replacing a lost social security card. 2010 tax forms 1040ez   If you have a number but lost your card, file Form SS-5. 2010 tax forms 1040ez You will get a new card showing your original number, not a new number. 2010 tax forms 1040ez Name change. 2010 tax forms 1040ez   If your name has changed since you received your social security card, complete Form SS-5 to report a name change. 2010 tax forms 1040ez Obtaining an individual taxpayer identification number. 2010 tax forms 1040ez   The IRS will issue you an ITIN, for tax use only, if you are a nonresident or resident alien and you do not have, and are not eligible to get, an SSN. 2010 tax forms 1040ez To apply for an ITIN, file Form W-7, Application for IRS Individual Taxpayer Identification Number. 2010 tax forms 1040ez You can get this form by calling 1-800-829-3676. 2010 tax forms 1040ez For more information on ITINs, see Publication 1915, Understanding Your IRS Individual Taxpayer Identification Number. 2010 tax forms 1040ez Form W-7 and Publication 1915 are also available in Spanish. 2010 tax forms 1040ez    You can also download Form W-7 from the IRS website at IRS. 2010 tax forms 1040ez gov. 2010 tax forms 1040ez Paying estimated tax. 2010 tax forms 1040ez   Estimated tax is the method used to pay tax (including SE tax) on income not subject to withholding. 2010 tax forms 1040ez You generally have to make estimated tax payments if you expect to owe tax, including SE tax, of $1,000 or more when you file your return. 2010 tax forms 1040ez Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay the tax. 2010 tax forms 1040ez   However, if at least two-thirds of your gross income for 2013 or 2014 was from farming and you file your 2014 Form 1040 and pay all the tax due by March 2, 2015, you do not have to pay any estimated tax. 2010 tax forms 1040ez For more information about estimated tax for farmers, see chapter 15. 2010 tax forms 1040ez Penalty for underpayment of estimated tax. 2010 tax forms 1040ez   You may have to pay a penalty if you do not pay enough estimated tax by its due date. 2010 tax forms 1040ez Who Must Pay Self-Employment Tax? You must pay SE tax and file Schedule SE (Form 1040) if your net earnings from self-employment were $400 or more. 2010 tax forms 1040ez The SE tax rules apply no matter how old you are and even if you are already receiving social security or Medicare benefits. 2010 tax forms 1040ez Aliens. 2010 tax forms 1040ez   Generally, resident aliens must pay self-employment tax under the same rules that apply to U. 2010 tax forms 1040ez S. 2010 tax forms 1040ez citizens. 2010 tax forms 1040ez Nonresident aliens are not subject to self-employment tax. 2010 tax forms 1040ez However, residents of the Virgin Islands, Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, or American Samoa are subject to self-employment tax, as they are considered U. 2010 tax forms 1040ez S. 2010 tax forms 1040ez residents for self-employment tax purposes. 2010 tax forms 1040ez For more information on aliens, see Publication 519, U. 2010 tax forms 1040ez S. 2010 tax forms 1040ez Tax Guide for Aliens. 2010 tax forms 1040ez Are you self-employed?   You are self-employed if you carry on a trade or business (such as running a farm) as a sole proprietor, an independent contractor, a member of a partnership, or are otherwise in business for yourself. 2010 tax forms 1040ez A trade or business is generally an activity carried on for a livelihood or in good faith to make a profit. 2010 tax forms 1040ez Share farmer. 2010 tax forms 1040ez   You are a self-employed farmer under an income-sharing arrangement if both the following apply. 2010 tax forms 1040ez You produce a crop or raise livestock on land belonging to another person. 2010 tax forms 1040ez Your share of the crop or livestock, or the proceeds from their sale, depends on the amount produced. 2010 tax forms 1040ez Your net farm profit or loss from the income-sharing arrangement is reported on Schedule F (Form 1040) and included in your self-employment earnings. 2010 tax forms 1040ez   If you produce a crop or livestock on land belonging to another person and are to receive a specified rate of pay, a fixed sum of money, or a fixed quantity of the crop or livestock, and not a share of the crop or livestock or their proceeds, you may be either self-employed or an employee of the landowner. 2010 tax forms 1040ez This will depend on whether the landowner has the right to direct or control your performance of services. 2010 tax forms 1040ez Example. 2010 tax forms 1040ez A share farmer produces a crop on land owned by another person on a 50-50 crop-share basis. 2010 tax forms 1040ez Under the terms of their agreement, the share farmer furnishes the labor and half the cost of seed and fertilizer. 2010 tax forms 1040ez The landowner furnishes the machinery and equipment used to produce and harvest the crop, and half the cost of seed and fertilizer. 2010 tax forms 1040ez The share farmer is provided a house in which to live. 2010 tax forms 1040ez The landowner and the share farmer decide on a cropping plan. 2010 tax forms 1040ez The share farmer is a self-employed farmer for purposes of the agreement to produce the crops, and the share farmer's part of the profit or loss from the crops is reported on Schedule F (Form 1040) and included in self-employment earnings. 2010 tax forms 1040ez The tax treatment of the landowner is discussed later under Landlord Participation in Farming. 2010 tax forms 1040ez Contract farming. 2010 tax forms 1040ez   Under typical contract farming arrangements, the grower receives a fixed payment per unit of crops or finished livestock delivered to the processor or packing company. 2010 tax forms 1040ez Since the grower typically furnishes labor and bears some production risk, the payments are reported on Schedule F and are therefore subject to self-employment tax. 2010 tax forms 1040ez 4-H Club or FFA project. 2010 tax forms 1040ez   If an individual participates in a 4-H Club or Future Farmers of America (FFA) project, any net income received from sales or prizes related to the project may be subject to income tax. 2010 tax forms 1040ez Report the net income as “Other income” on line 21 of Form 1040. 2010 tax forms 1040ez If necessary, attach a statement showing the gross income and expenses. 2010 tax forms 1040ez The net income may not be subject to SE tax if the project is primarily for educational purposes and not for profit, and is completed by the individual under the rules and economic restrictions of the sponsoring 4-H or FFA organization. 2010 tax forms 1040ez Such a project is generally not considered a trade or business. 2010 tax forms 1040ez Partners in a partnership. 2010 tax forms 1040ez   Generally, you are self-employed if you are a member of a partnership that carries on a trade or business. 2010 tax forms 1040ez Limited partner. 2010 tax forms 1040ez   If you are a limited partner, your partnership income is generally not subject to SE tax. 2010 tax forms 1040ez However, guaranteed payments you receive for services you perform for the partnership are subject to SE tax and should be reported to you in box 14 of your Schedule K-1 (Form 1065). 2010 tax forms 1040ez Business Owned and Operated by Spouses. 2010 tax forms 1040ez   If you and your spouse jointly own and operate a farm as an unincorporated business and share in the profits and losses, you are partners in a partnership whether or not you have a formal partnership agreement. 2010 tax forms 1040ez You must file Form 1065, instead of Schedule F, unless you make a joint election to be treated as a qualified joint venture. 2010 tax forms 1040ez Making this election will allow you to avoid the complexity of Form 1065 but still give each spouse credit for social security earnings on which retirement benefits are based. 2010 tax forms 1040ez Qualified joint venture. 2010 tax forms 1040ez   If you and your spouse each materially participate as the only members of a jointly owned and operated farm, and you file a joint tax return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership for the tax year. 2010 tax forms 1040ez For an explanation of “material participation,” see the instructions for Schedule C, line G, and the instructions for Schedule F, line E. 2010 tax forms 1040ez   To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. 2010 tax forms 1040ez Each of you must file a separate Schedule F and a separate Schedule SE. 2010 tax forms 1040ez For more information, see Qualified Joint Venture in the Instructions for Schedule SE (Form 1040). 2010 tax forms 1040ez Spouse employee. 2010 tax forms 1040ez   If your spouse is your employee, not your partner, you must withhold and pay social security and Medicare taxes for him or her. 2010 tax forms 1040ez For more information about employment taxes, see chapter 13. 2010 tax forms 1040ez Community property. 2010 tax forms 1040ez   If you are a partner and your distributive share of any income or loss from a trade or business carried on by the partnership is community property, treat your share as your self-employment earnings. 2010 tax forms 1040ez Do not treat any of your share as self-employment earnings of your spouse. 2010 tax forms 1040ez Figuring Self-Employment Earnings Farmer. 2010 tax forms 1040ez   If you are self-employed as a farmer, use Schedule F (Form 1040) to figure your self-employment earnings. 2010 tax forms 1040ez Partnership income or loss. 2010 tax forms 1040ez   If you are a member of a partnership that carries on a trade or business, the partnership should report your self-employment earnings in box 14, code A, of your Schedule K-1 (Form 1065). 2010 tax forms 1040ez Box 14 of Schedule K-1 may also provide amounts for gross farming or fishing income (code B) and gross nonfarm income (code C). 2010 tax forms 1040ez Use these amounts if you use the farm or nonfarm optional method to figure net earnings from self-employment (see Methods for Figuring Net Earnings , later). 2010 tax forms 1040ez   If you are a general partner, you may need to reduce these reported earnings by amounts you claim as a section 179 deduction, unreimbursed partnership expenses, or depletion on oil and gas properties. 2010 tax forms 1040ez   If the amount reported is a loss, include only the deductible amount when you figure your total self-employment earnings. 2010 tax forms 1040ez   For more information, see the Partner's Instructions for Schedule K-1 (Form 1065). 2010 tax forms 1040ez   For general information on partnerships, see Publication 541. 2010 tax forms 1040ez More than one business. 2010 tax forms 1040ez   If you have self-employment earnings from more than one trade, business, or profession, you generally must combine the net profit or loss from each to determine your total self-employment earnings. 2010 tax forms 1040ez A loss from one business reduces your profit from another business. 2010 tax forms 1040ez However, do not combine earnings from farm and nonfarm businesses if you are using one of the optional methods (discussed later) to figure net earnings. 2010 tax forms 1040ez Community property. 2010 tax forms 1040ez   If any of the income from a farm or business, other than a partnership, is community property under state law, it is included in the self-employment earnings of the spouse carrying on the trade or business. 2010 tax forms 1040ez Lost income payments. 2010 tax forms 1040ez   Lost income payments received from insurance or other sources for reducing or stopping farming activities are included in self-employment earnings. 2010 tax forms 1040ez These include USDA payments to compensate for lost income resulting from reductions in tobacco quotas and allotments. 2010 tax forms 1040ez Even if you are not farming when you receive the payment, it is included in self-employment earnings if it relates to your farm business (even though it is temporarily inactive). 2010 tax forms 1040ez A connection exists if it is clear the payment would not have been made but for your conduct of your farm business. 2010 tax forms 1040ez Gain or loss. 2010 tax forms 1040ez   A gain or loss from the disposition of property that is neither stock in trade nor held primarily for sale to customers is not included in self-employment earnings. 2010 tax forms 1040ez It does not matter whether the disposition is a sale, exchange, or involuntary conversion. 2010 tax forms 1040ez For example, gains or losses from the disposition of the following types of property are not included in self-employment earnings. 2010 tax forms 1040ez Investment property. 2010 tax forms 1040ez Depreciable property or other fixed assets used in your trade or business. 2010 tax forms 1040ez Livestock held for draft, breeding, sport, or dairy purposes, and not held primarily for sale, regardless of how long the livestock was held, or whether it was raised or purchased. 2010 tax forms 1040ez Unharvested standing crops sold with land held more than 1 year. 2010 tax forms 1040ez Timber, coal, or iron ore held for more than 1 year if an economic interest was retained, such as a right to receive coal royalties. 2010 tax forms 1040ez   A gain or loss from the cutting of timber is not included in self-employment earnings if the cutting is treated as a sale or exchange. 2010 tax forms 1040ez For more information on electing to treat the cutting of timber as a sale or exchange, see Timber in chapter 8. 2010 tax forms 1040ez Wages and salaries. 2010 tax forms 1040ez   Wages and salaries received for services performed as an employee and covered by social security or railroad retirement are not included in self-employment earnings. 2010 tax forms 1040ez   Wages paid in kind to you for agricultural labor, such as commodity wages, are not included in self-employment earnings. 2010 tax forms 1040ez Retired partner. 2010 tax forms 1040ez   Retirement income received by a partner from his or her partnership under a written plan is not included in self-employment earnings if all the following apply. 2010 tax forms 1040ez The retired partner performs no services for the partnership during the year. 2010 tax forms 1040ez The retired partner is owed only the retirement payments. 2010 tax forms 1040ez The retired partner's share (if any) of the partnership capital was fully paid to the retired partner. 2010 tax forms 1040ez The payments to the retired partner are lifelong periodic payments. 2010 tax forms 1040ez Conservation Reserve Program (CRP) payments. 2010 tax forms 1040ez   Under the Conservation Reserve Program (CRP), if you own or operate highly erodible or other specified cropland, you may enter into a longterm contract with the USDA, agreeing to convert to a less intensive use of that cropland. 2010 tax forms 1040ez You must include the annual rental payments and any onetime incentive payment you receive under the program on Schedule F, lines 4a and 4b. 2010 tax forms 1040ez Cost share payments you receive may qualify for the costsharing exclusion. 2010 tax forms 1040ez See Cost-Sharing Exclusion (Improvements), above. 2010 tax forms 1040ez CRP payments are reported to you on Form 1099G. 2010 tax forms 1040ez Individuals who are receiving Social Security retirement or disability benefits may exclude CRP payments when calculating self-employment tax. 2010 tax forms 1040ez See the instructions for Schedule SE (Form 1040). 2010 tax forms 1040ez Self-employed health insurance deduction. 2010 tax forms 1040ez   You cannot deduct the self-employed health insurance deduction you report on Form 1040, line 29, from self-employment earnings on Schedule SE (Form 1040). 2010 tax forms 1040ez Landlord Participation in Farming As a general rule, income and deductions from rentals and from personal property leased with real estate are not included in determining self-employment earnings. 2010 tax forms 1040ez However, income and deductions from farm rentals, including government commodity program payments received by a landowner who rents land, are included if the rental arrangement provides that the landowner will, and does, materially participate in the production or management of production of the farm products on the land. 2010 tax forms 1040ez Crop shares. 2010 tax forms 1040ez   Rent paid in the form of crop shares is included in self-employment earnings for the year you sell, exchange, give away, or use the crop shares if you meet one of the four material participation tests (discussed next) at the time the crop shares are produced. 2010 tax forms 1040ez Feeding such crop shares to livestock is considered using them. 2010 tax forms 1040ez Your gross income for figuring your self-employment earnings includes the fair market value of the crop shares when they are used as feed. 2010 tax forms 1040ez Material participation for landlords. 2010 tax forms 1040ez   You materially participate if you have an arrangement with your tenant for your participation and you meet one or more of the following tests. 2010 tax forms 1040ez You do at least three of the following. 2010 tax forms 1040ez Pay, using cash or credit, at least half the direct costs of producing the crop or livestock. 2010 tax forms 1040ez Furnish at least half the tools, equipment, and livestock used in the production activities. 2010 tax forms 1040ez Advise or consult with your tenant. 2010 tax forms 1040ez Inspect the production activities periodically. 2010 tax forms 1040ez You regularly and frequently make, or take an important part in making, management decisions substantially contributing to or affecting the success of the enterprise. 2010 tax forms 1040ez You work 100 hours or more spread over a period of 5 weeks or more in activities connected with agricultural production. 2010 tax forms 1040ez You do things that, considered in their totality, show you are materially and significantly involved in the production of the farm commodities. 2010 tax forms 1040ez These tests may be used as general guides for determining whether you are a material participant. 2010 tax forms 1040ez Example. 2010 tax forms 1040ez Drew Houston agrees to produce a crop on J. 2010 tax forms 1040ez Clarke's cotton farm, with each receiving half the proceeds. 2010 tax forms 1040ez Clarke advises Houston when to plant, spray, and pick the cotton. 2010 tax forms 1040ez During the growing season, Clarke inspects the crop every few days to determine whether Houston is properly taking care of the crop. 2010 tax forms 1040ez Houston furnishes all labor needed to grow and harvest the crop. 2010 tax forms 1040ez The management decisions made by Clarke in connection with the care of the cotton crop and his regular inspection of the crop establish that he participates to a material degree in the cotton production operations. 2010 tax forms 1040ez The income Clarke receives from his cotton farm is included in his self-employment earnings. 2010 tax forms 1040ez Methods for Figuring Net Earnings There are three ways to figure your net earnings from self-employment. 2010 tax forms 1040ez The regular method. 2010 tax forms 1040ez The farm optional method. 2010 tax forms 1040ez The nonfarm optional method. 2010 tax forms 1040ez You must use the regular method unless you are eligible to use one or both of the optional methods. 2010 tax forms 1040ez See Figure 12-1 , shown later. 2010 tax forms 1040ez Figure 12-1. 2010 tax forms 1040ez Can I Use the Optional Methods? Please click here for the text description of the image. 2010 tax forms 1040ez Figure 12–1. 2010 tax forms 1040ez Can I Use the Optional Methods? Why use an optional method?   You may want to use the optional methods (discussed later) when you have a loss or a small net profit and any one of the following applies. 2010 tax forms 1040ez You want to receive credit for social security benefit coverage. 2010 tax forms 1040ez You incurred child or dependent care expenses for which you could claim a credit. 2010 tax forms 1040ez (An optional method may increase your earned income, which could increase your credit. 2010 tax forms 1040ez ) You are entitled to the earned income credit. 2010 tax forms 1040ez (An optional method may increase your earned income, which could increase your credit. 2010 tax forms 1040ez ) You are entitled to the additional child tax credit. 2010 tax forms 1040ez (An optional method may increase your earned income, which could increase your credit. 2010 tax forms 1040ez ) Effects of using an optional method. 2010 tax forms 1040ez   Using an optional method could increase your SE tax. 2010 tax forms 1040ez Paying more SE tax may result in you getting higher social security disability or retirement benefits. 2010 tax forms 1040ez   If you use either or both optional methods, you must figure and pay the SE tax due under these methods even if you would have had a smaller SE tax or no SE tax using the regular method. 2010 tax forms 1040ez   The optional methods may be used only to figure your SE tax. 2010 tax forms 1040ez To figure your income tax, include your actual self-employment earnings in gross income, regardless of which method you use to determine SE tax. 2010 tax forms 1040ez Regular Method Multiply your total self-employment earnings by 92. 2010 tax forms 1040ez 35% (. 2010 tax forms 1040ez 9235) to get your net earnings under the regular method. 2010 tax forms 1040ez See Short Schedule SE, line 4, or Long Schedule SE, line 4a. 2010 tax forms 1040ez Net earnings figured using the regular method are also called “actual net earnings. 2010 tax forms 1040ez ” Farm Optional Method Use the farm optional method only for self-employment earnings from a farming business. 2010 tax forms 1040ez You can use this method if you meet either of the following tests. 2010 tax forms 1040ez Your gross farm income is $6,960 or less. 2010 tax forms 1040ez Your net farm profits are less than $5,024. 2010 tax forms 1040ez Gross farm income. 2010 tax forms 1040ez   Your gross farm income is the total of the amounts from: Schedule F (Form 1040), line 9, and Schedule K-1 (Form 1065), box 14, code B (from farm partnerships). 2010 tax forms 1040ez Net farm profits. 2010 tax forms 1040ez   Net farm profits generally are the total of the amounts from: Schedule F (Form 1040), line 34, and Schedule K-1 (Form 1065), box 14, code A (from farm partnerships). 2010 tax forms 1040ez However, you may need to adjust the amount reported on Schedule K-1 if you are a general partner or if it is a loss. 2010 tax forms 1040ez For more information, see Partnership income or loss , earlier. 2010 tax forms 1040ez Figuring farm net earnings. 2010 tax forms 1040ez   If you meet either of the two tests explained above, use Table 12-1. 2010 tax forms 1040ez Figuring Farm Net Earnings , to figure your net earnings from self-employment under the farm optional method. 2010 tax forms 1040ez Table 12-1. 2010 tax forms 1040ez Figuring Farm Net Earnings IF your gross farm income  is. 2010 tax forms 1040ez . 2010 tax forms 1040ez . 2010 tax forms 1040ez THEN your net earnings are equal to. 2010 tax forms 1040ez . 2010 tax forms 1040ez . 2010 tax forms 1040ez $6,960 or less Two-thirds of your gross farm income. 2010 tax forms 1040ez More than $6,960 $4,640 Optional method can reduce or eliminate SE tax. 2010 tax forms 1040ez   If your gross farm income is $6,960 or less and your farm net earnings figured under the farm optional method are less than your actual net earnings, you can use the farm optional method to reduce or eliminate your SE tax. 2010 tax forms 1040ez Your actual net earnings are your net earnings figured using the regular method, explained earlier. 2010 tax forms 1040ez Example. 2010 tax forms 1040ez Your gross farm income is $540 and your net farm profit is $460. 2010 tax forms 1040ez Consequently, your net earnings figured under the farm optional method are $360 (2/3 of $540) and your actual net earnings are $425 (92. 2010 tax forms 1040ez 35% of $460). 2010 tax forms 1040ez You owe no SE tax if you use the optional method because your net earnings under the farm optional method are less than $400. 2010 tax forms 1040ez Nonfarm Optional Method This is an optional method available for determining net earnings from nonfarm self-employment, much like the farm optional method. 2010 tax forms 1040ez If you are also engaged in a nonfarm business, you may be able to use this method to figure your nonfarm net earnings. 2010 tax forms 1040ez You can use this method even if you do not use the farm optional method for determining your farm net earnings and even if you have a net loss from your nonfarm business. 2010 tax forms 1040ez For more information about the nonfarm optional method, see Publication 334. 2010 tax forms 1040ez You cannot combine farm and nonfarm self-employment earnings to figure your net earnings under either of the optional methods. 2010 tax forms 1040ez Using Both Optional Methods If you use both optional methods, you must add the net earnings figured under each method to arrive at your total net earnings from self-employment. 2010 tax forms 1040ez You can report less than your total actual farm and nonfarm net earnings but not less than actual nonfarm net earnings. 2010 tax forms 1040ez If you use both optional methods, you can report no more than $4,640 as your combined net earnings from self-employment. 2010 tax forms 1040ez Reporting Self-Employment Tax Use Schedule SE (Form 1040) to figure and report your SE tax. 2010 tax forms 1040ez Then, enter the SE tax on line 56 of Form 1040 and attach Schedule SE to Form 1040. 2010 tax forms 1040ez Most taxpayers can use Section A–Short Schedule SE to figure their SE tax. 2010 tax forms 1040ez However, certain taxpayers must use Section B–Long Schedule SE. 2010 tax forms 1040ez Use the chart on page 1 of Schedule SE to find out which one to use. 2010 tax forms 1040ez If you have to pay SE tax, you must file Form 1040 (with Schedule SE attached) even if you do not otherwise have to file a federal income tax return. 2010 tax forms 1040ez Deduction for employer-equivalent portion of self-employment tax. 2010 tax forms 1040ez   You can deduct the employer-equivalent portion of your SE tax in figuring your adjusted gross income. 2010 tax forms 1040ez This deduction only affects your income tax. 2010 tax forms 1040ez It does not affect either your net earnings from self-employment or your SE tax. 2010 tax forms 1040ez   To deduct the tax, enter on Form 1040, line 27, the amount shown on Section A, Line 6, or Section B, line 13, Deduction for employer-equivalent portion of self-employment tax, of the Schedule SE. 2010 tax forms 1040ez Joint return. 2010 tax forms 1040ez   Even if you file a joint return, you cannot file a joint Schedule SE. 2010 tax forms 1040ez This is true whether one spouse or both spouses have self-employment earnings. 2010 tax forms 1040ez Your spouse is not considered self-employed just because you are. 2010 tax forms 1040ez If both of you have self-employment earnings, each of you must complete a separate Schedule SE. 2010 tax forms 1040ez However, if one spouse uses the Short Schedule SE and the other spouse has to use the Long Schedule SE, both can use the same form. 2010 tax forms 1040ez Attach both schedules to the joint return. 2010 tax forms 1040ez If you and your spouse operate a business as a partnership, see Business Owned and Operated by Spouses and Qualified joint venture , earlier, under Who Must Pay Self-Employment Tax . 2010 tax forms 1040ez Prev  Up  Next   Home   More Online Publications