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Irs And Form 1040

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Irs And Form 1040

Irs and form 1040 3. Irs and form 1040   Self-Employment Tax Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Who Must Pay Self-Employment Tax?Employed by a U. Irs and form 1040 S. Irs and form 1040 Church Effect of Exclusion Members of the Clergy Income From U. Irs and form 1040 S. Irs and form 1040 Possessions Exemption From Social Security and Medicare Taxes Topics - This chapter discusses: Who must pay self-employment tax, and Who is exempt from self-employment tax. Irs and form 1040 Useful Items - You may want to see: Publication 334 Tax Guide for Small Business 517 Social Security and Other Information for Members of the Clergy and Religious Workers Form (and Instructions) Form 1040-PR Planilla para la Declaración de la Contribución Federal sobre el Trabajo por Cuenta Propia Form 1040-SS U. Irs and form 1040 S. Irs and form 1040 Self-Employment Tax Return Form 4361 Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners Schedule SE (Form 1040) Self-Employment Tax See chapter 7 for information about getting these publications and forms. Irs and form 1040 Who Must Pay Self-Employment Tax? If you are a self-employed U. Irs and form 1040 S. Irs and form 1040 citizen or resident, the rules for paying self-employment tax are generally the same whether you are living in the United States or abroad. Irs and form 1040 The self-employment tax is a social security and Medicare tax on net earnings from self- employment. Irs and form 1040 You must pay self-employment tax if your net earnings from self-employment are at least $400. Irs and form 1040 For 2013, the maximum amount of net earnings from self-employment that is subject to the social security portion of the tax is $113,700. Irs and form 1040 All net earnings are subject to the Medicare portion of the tax. Irs and form 1040 Employed by a U. Irs and form 1040 S. Irs and form 1040 Church If you were employed by a U. Irs and form 1040 S. Irs and form 1040 church or a qualified church-controlled organization that chose exemption from social security and Medicare taxes and you received wages of $108. Irs and form 1040 28 or more from the organization, the amounts paid to you are subject to self-employment tax. Irs and form 1040 However, you can choose to be exempt from social security and Medicare taxes if you are a member of a recognized religious sect. Irs and form 1040 See Publication 517 for more information about church employees and self-employment tax. Irs and form 1040 Effect of Exclusion You must take all of your self-employment income into account in figuring your net earnings from self-employment, even income that is exempt from income tax because of the foreign earned income exclusion. Irs and form 1040 Example. Irs and form 1040 You are in business abroad as a consultant and qualify for the foreign earned income exclusion. Irs and form 1040 Your foreign earned income is $95,000, your business deductions total $27,000, and your net profit is $68,000. Irs and form 1040 You must pay self-employment tax on all of your net profit, including the amount you can exclude from income. Irs and form 1040 Members of the Clergy If you are a member of the clergy, you are treated as self-employed for self-employment tax purposes. Irs and form 1040 Your U. Irs and form 1040 S. Irs and form 1040 self-employment tax is based upon net earnings from self-employment figured without regard to the foreign earned income exclusion or the foreign housing exclusion. Irs and form 1040 You can receive exemption from coverage for your ministerial duties if you conscientiously oppose public insurance due to religious reasons or if you oppose it due to the religious principles of your denomination. Irs and form 1040 You must file Form 4361 to apply for this exemption. Irs and form 1040 This subject is discussed in further detail in Publication 517. Irs and form 1040 Income From U. Irs and form 1040 S. Irs and form 1040 Possessions If you are a U. Irs and form 1040 S. Irs and form 1040 citizen or resident alien and you own and operate a business in Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, American Samoa, or the U. Irs and form 1040 S. Irs and form 1040 Virgin Islands, you must pay tax on your net earnings from self-employment (if they are $400 or more) from those sources. Irs and form 1040 You must pay the self-employment tax whether or not the income is exempt from U. Irs and form 1040 S. Irs and form 1040 income taxes (or whether or not you otherwise must file a U. Irs and form 1040 S. Irs and form 1040 income tax return). Irs and form 1040 Unless your situation is described below, attach Schedule SE (Form 1040) to your U. Irs and form 1040 S. Irs and form 1040 income tax return. Irs and form 1040 If you do not have to file Form 1040 with the United States and you are a resident of any of the U. Irs and form 1040 S. Irs and form 1040 possessions listed in the preceding paragraph, figure your self-employment tax on Form 1040-SS. Irs and form 1040 Residents of Puerto Rico may file the Spanish-language Formulario 1040-PR. Irs and form 1040 If you are not enclosing a check or money order, file your return with the: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215 If you are enclosing a check or money order, file your return with the: Department of the Treasury P. Irs and form 1040 O. Irs and form 1040 Box 1303 Charlotte, NC 28201-1303 Exemption From Social Security and Medicare Taxes The United States may reach agreements with foreign countries to eliminate dual coverage and dual contributions (taxes) to social security systems for the same work. Irs and form 1040 See Bilateral Social Security (Totalization) Agreements in chapter 2 under Social Security and Medicare Taxes. Irs and form 1040 As a general rule, self-employed persons who are subject to dual taxation will only be covered by the social security system of the country where they reside. Irs and form 1040 For more information on how any specific agreement affects self-employed persons, contact the United States Social Security Administration, as discussed under Bilateral Social Security (Totalization) Agreements in chapter 2. Irs and form 1040 If your self-employment earnings should be exempt from foreign social security tax and subject only to U. Irs and form 1040 S. Irs and form 1040 self-employment tax, you should request a certificate of coverage from the U. Irs and form 1040 S. Irs and form 1040 Social Security Administration, Office of International Programs. Irs and form 1040 The certificate will establish your exemption from the foreign social security tax. Irs and form 1040 Send the request to the: Social Security Administration Office of International Programs P. Irs and form 1040 O. Irs and form 1040 Box 17741 Baltimore, MD 21235-7741 Prev  Up  Next   Home   More Online Publications
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Unclaimed Money from the Government

Find unclaimed money from bank failures, matured savings bonds, pensions, mortgage refunds, and more.


What Is Unclaimed Money?

If the government owes you money and you do not collect it, then it’s unclaimed. This can also happen with banks, credit unions, pensions, and other sources.

Beware of unclaimed money scams. There are people who pretend to be the government and offer to send you unclaimed money for a fee. Government agencies will not call you about unclaimed money or assets. Learn how to spot these types of scams.

Currently, the government does not have one website for finding unclaimed money by name, Social Security number, or state. To find it, you’ll need to visit each site separately and perform a search.

States’ Unclaimed Money

  • Search by State  – Search your state’s listing of unclaimed funds and property.

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Taxes

Banking, Investments, and Currency

  • Bank Failures  – Search the Federal Deposit Insurance Corporation (FDIC) for unclaimed funds from failed financial institutions.
  • Credit Union Failures  – Find unclaimed deposits from credit unions.
  • SEC Claims Funds  – The Securities and Exchange Commission (SEC) lists enforcement cases where a company or person owes investors money.
  • Damaged Money  – The Treasury Department will exchange mutilated or damaged U.S. currency.

Mortgages

  • FHA-Insurance Refunds  – If you had an FHA-insured mortgage, you may be eligible for a refund from the Department of Housing and Urban Development (HUD).

Savings Bonds

International

  • Foreign Claims  – U.S. nationals can find money owed to them from foreign governments after loss of property.

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The Irs And Form 1040

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