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Irs E File 2011

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Irs E File 2011

Irs e file 2011 12. Irs e file 2011   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 e file 2011 Name change. Irs e file 2011 Penalty for underpayment of estimated tax. Irs e file 2011 Who Must Pay Self-Employment Tax?Limited partner. Irs e file 2011 Community property. Irs e file 2011 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 e file 2011  For tax years beginning in 2013, the social security part of the self-employment tax increases from 10. Irs e file 2011 4% to 12. Irs e file 2011 4%. Irs e file 2011 The Medicare part of the tax remains at 2. Irs e file 2011 9%. Irs e file 2011 As a result, the self-employment tax is increased from 13. Irs e file 2011 3% to 15. Irs e file 2011 3%. Irs e file 2011 Additional Medicare Tax. Irs e file 2011 . Irs e file 2011  For tax years beginning in 2013, a 0. Irs e file 2011 9% Additional Medicare Tax applies to your Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income above a threshold amount. Irs e file 2011 Use Form 8959, Additional Medicare Tax, to figure this tax. Irs e file 2011 For more information, see the Instructions for Form 8959. Irs e file 2011 Maximum net earnings. Irs e file 2011  The maximum net self-employment earnings subject to the social security part (12. Irs e file 2011 4%) of the self-employment tax increased to $113,700 for 2013. Irs e file 2011 There is no maximum limit on earnings subject to the Medicare part (2. Irs e file 2011 9%). Irs e file 2011 What's New for 2014 Maximum net earnings. Irs e file 2011  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 e file 2011 Introduction Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. Irs e file 2011 It is similar to the social security and Medicare taxes withheld from the pay of most wage earners. Irs e file 2011 You usually have to pay SE tax if you are self-employed. Irs e file 2011 You are usually self-employed if you operate your own farm on land you either own or rent. Irs e file 2011 You have to figure SE tax on Schedule SE (Form 1040). Irs e file 2011 Farmers who have employees may have to pay the employer's share of social security and Medicare taxes, as well. Irs e file 2011 See chapter 13 for information on employment taxes. Irs e file 2011 Self-employment tax rate. Irs e file 2011   For tax years beginning in 2013, the self-employment tax rate is 15. Irs e file 2011 3%. Irs e file 2011 The rate consists of two parts: 12. Irs e file 2011 4% for social security (old-age, survivors, and disability insurance) and 2. Irs e file 2011 9% for Medicare (hospital insurance). Irs e file 2011 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 e file 2011 S. Irs e file 2011 Individual Income Tax Return Sch F (Form 1040) Profit or Loss From Farming Sch SE (Form 1040) Self-Employment Tax 1065 U. Irs e file 2011 S. Irs e file 2011 Return of Partnership Income Sch K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. Irs e file 2011 See chapter 16 for information about getting publications and forms. Irs e file 2011 Why Pay Self-Employment Tax? Social security benefits are available to self-employed persons just as they are to wage earners. Irs e file 2011 Your payments of SE tax contribute to your coverage under the social security system. Irs e file 2011 Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. Irs e file 2011 How to become insured under social security. Irs e file 2011   You must be insured under the social security system before you begin receiving social security benefits. Irs e file 2011 You are insured if you have the required number of credits (also called quarters of coverage). Irs e file 2011 Earning credits in 2013. Irs e file 2011   You can earn a maximum of four credits per year. Irs e file 2011 For 2013, you earn one credit for each $1,160 of combined wages and self-employment earnings subject to social security tax. Irs e file 2011 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 e file 2011 It does not matter whether the income is earned in 1 quarter or is spread over 2 or more quarters. Irs e file 2011 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 e file 2011 socialsecurity. Irs e file 2011 gov. Irs e file 2011 Making false statements to get or to increase social security benefits may subject you to penalties. Irs e file 2011 The Social Security Administration (SSA) time limit for posting self-employment earnings. Irs e file 2011   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 e file 2011    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 e file 2011 The SSA will not change its records to increase your self-employment earnings after the SSA time limit listed above. Irs e file 2011 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 e file 2011 This section explains how to: Obtain an SSN or ITIN, and Pay your SE tax using estimated tax. Irs e file 2011 An ITIN does not entitle you to social security benefits. Irs e file 2011 Obtaining an ITIN does not change your immigration or employment status under U. Irs e file 2011 S. Irs e file 2011 law. Irs e file 2011 Obtaining a social security number. Irs e file 2011   If you have never had an SSN, apply for one using Form SS-5, Application for a Social Security Card. Irs e file 2011 The application is also available in Spanish. Irs e file 2011 You can get this form at any Social Security office or by calling 1-800-772-1213. Irs e file 2011    You can also download Form SS-5 from the Social Security Administration website at  www. Irs e file 2011 socialsecurity. Irs e file 2011 gov. Irs e file 2011   If you have a social security number from the time you were an employee, you must use that number. Irs e file 2011 Do not apply for a new one. Irs e file 2011 Replacing a lost social security card. Irs e file 2011   If you have a number but lost your card, file Form SS-5. Irs e file 2011 You will get a new card showing your original number, not a new number. Irs e file 2011 Name change. Irs e file 2011   If your name has changed since you received your social security card, complete Form SS-5 to report a name change. Irs e file 2011 Obtaining an individual taxpayer identification number. Irs e file 2011   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 e file 2011 To apply for an ITIN, file Form W-7, Application for IRS Individual Taxpayer Identification Number. Irs e file 2011 You can get this form by calling 1-800-829-3676. Irs e file 2011 For more information on ITINs, see Publication 1915, Understanding Your IRS Individual Taxpayer Identification Number. Irs e file 2011 Form W-7 and Publication 1915 are also available in Spanish. Irs e file 2011    You can also download Form W-7 from the IRS website at IRS. Irs e file 2011 gov. Irs e file 2011 Paying estimated tax. Irs e file 2011   Estimated tax is the method used to pay tax (including SE tax) on income not subject to withholding. Irs e file 2011 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 e file 2011 Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay the tax. Irs e file 2011   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 e file 2011 For more information about estimated tax for farmers, see chapter 15. Irs e file 2011 Penalty for underpayment of estimated tax. Irs e file 2011   You may have to pay a penalty if you do not pay enough estimated tax by its due date. Irs e file 2011 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 e file 2011 The SE tax rules apply no matter how old you are and even if you are already receiving social security or Medicare benefits. Irs e file 2011 Aliens. Irs e file 2011   Generally, resident aliens must pay self-employment tax under the same rules that apply to U. Irs e file 2011 S. Irs e file 2011 citizens. Irs e file 2011 Nonresident aliens are not subject to self-employment tax. Irs e file 2011 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 e file 2011 S. Irs e file 2011 residents for self-employment tax purposes. Irs e file 2011 For more information on aliens, see Publication 519, U. Irs e file 2011 S. Irs e file 2011 Tax Guide for Aliens. Irs e file 2011 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 e file 2011 A trade or business is generally an activity carried on for a livelihood or in good faith to make a profit. Irs e file 2011 Share farmer. Irs e file 2011   You are a self-employed farmer under an income-sharing arrangement if both the following apply. Irs e file 2011 You produce a crop or raise livestock on land belonging to another person. Irs e file 2011 Your share of the crop or livestock, or the proceeds from their sale, depends on the amount produced. Irs e file 2011 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 e file 2011   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 e file 2011 This will depend on whether the landowner has the right to direct or control your performance of services. Irs e file 2011 Example. Irs e file 2011 A share farmer produces a crop on land owned by another person on a 50-50 crop-share basis. Irs e file 2011 Under the terms of their agreement, the share farmer furnishes the labor and half the cost of seed and fertilizer. Irs e file 2011 The landowner furnishes the machinery and equipment used to produce and harvest the crop, and half the cost of seed and fertilizer. Irs e file 2011 The share farmer is provided a house in which to live. Irs e file 2011 The landowner and the share farmer decide on a cropping plan. Irs e file 2011 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 e file 2011 The tax treatment of the landowner is discussed later under Landlord Participation in Farming. Irs e file 2011 Contract farming. Irs e file 2011   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 e file 2011 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 e file 2011 4-H Club or FFA project. Irs e file 2011   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 e file 2011 Report the net income as “Other income” on line 21 of Form 1040. Irs e file 2011 If necessary, attach a statement showing the gross income and expenses. Irs e file 2011 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 e file 2011 Such a project is generally not considered a trade or business. Irs e file 2011 Partners in a partnership. Irs e file 2011   Generally, you are self-employed if you are a member of a partnership that carries on a trade or business. Irs e file 2011 Limited partner. Irs e file 2011   If you are a limited partner, your partnership income is generally not subject to SE tax. Irs e file 2011 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 e file 2011 Business Owned and Operated by Spouses. Irs e file 2011   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 e file 2011 You must file Form 1065, instead of Schedule F, unless you make a joint election to be treated as a qualified joint venture. Irs e file 2011 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 e file 2011 Qualified joint venture. Irs e file 2011   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 e file 2011 For an explanation of “material participation,” see the instructions for Schedule C, line G, and the instructions for Schedule F, line E. Irs e file 2011   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 e file 2011 Each of you must file a separate Schedule F and a separate Schedule SE. Irs e file 2011 For more information, see Qualified Joint Venture in the Instructions for Schedule SE (Form 1040). Irs e file 2011 Spouse employee. Irs e file 2011   If your spouse is your employee, not your partner, you must withhold and pay social security and Medicare taxes for him or her. Irs e file 2011 For more information about employment taxes, see chapter 13. Irs e file 2011 Community property. Irs e file 2011   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 e file 2011 Do not treat any of your share as self-employment earnings of your spouse. Irs e file 2011 Figuring Self-Employment Earnings Farmer. Irs e file 2011   If you are self-employed as a farmer, use Schedule F (Form 1040) to figure your self-employment earnings. Irs e file 2011 Partnership income or loss. Irs e file 2011   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 e file 2011 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 e file 2011 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 e file 2011   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 e file 2011   If the amount reported is a loss, include only the deductible amount when you figure your total self-employment earnings. Irs e file 2011   For more information, see the Partner's Instructions for Schedule K-1 (Form 1065). Irs e file 2011   For general information on partnerships, see Publication 541. Irs e file 2011 More than one business. Irs e file 2011   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 e file 2011 A loss from one business reduces your profit from another business. Irs e file 2011 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 e file 2011 Community property. Irs e file 2011   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 e file 2011 Lost income payments. Irs e file 2011   Lost income payments received from insurance or other sources for reducing or stopping farming activities are included in self-employment earnings. Irs e file 2011 These include USDA payments to compensate for lost income resulting from reductions in tobacco quotas and allotments. Irs e file 2011 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 e file 2011 A connection exists if it is clear the payment would not have been made but for your conduct of your farm business. Irs e file 2011 Gain or loss. Irs e file 2011   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 e file 2011 It does not matter whether the disposition is a sale, exchange, or involuntary conversion. Irs e file 2011 For example, gains or losses from the disposition of the following types of property are not included in self-employment earnings. Irs e file 2011 Investment property. Irs e file 2011 Depreciable property or other fixed assets used in your trade or business. Irs e file 2011 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 e file 2011 Unharvested standing crops sold with land held more than 1 year. Irs e file 2011 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 e file 2011   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 e file 2011 For more information on electing to treat the cutting of timber as a sale or exchange, see Timber in chapter 8. Irs e file 2011 Wages and salaries. Irs e file 2011   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 e file 2011   Wages paid in kind to you for agricultural labor, such as commodity wages, are not included in self-employment earnings. Irs e file 2011 Retired partner. Irs e file 2011   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 e file 2011 The retired partner performs no services for the partnership during the year. Irs e file 2011 The retired partner is owed only the retirement payments. Irs e file 2011 The retired partner's share (if any) of the partnership capital was fully paid to the retired partner. Irs e file 2011 The payments to the retired partner are lifelong periodic payments. Irs e file 2011 Conservation Reserve Program (CRP) payments. Irs e file 2011   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 e file 2011 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 e file 2011 Cost share payments you receive may qualify for the costsharing exclusion. Irs e file 2011 See Cost-Sharing Exclusion (Improvements), above. Irs e file 2011 CRP payments are reported to you on Form 1099G. Irs e file 2011 Individuals who are receiving Social Security retirement or disability benefits may exclude CRP payments when calculating self-employment tax. Irs e file 2011 See the instructions for Schedule SE (Form 1040). Irs e file 2011 Self-employed health insurance deduction. Irs e file 2011   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 e file 2011 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 e file 2011 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 e file 2011 Crop shares. Irs e file 2011   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 e file 2011 Feeding such crop shares to livestock is considered using them. Irs e file 2011 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 e file 2011 Material participation for landlords. Irs e file 2011   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 e file 2011 You do at least three of the following. Irs e file 2011 Pay, using cash or credit, at least half the direct costs of producing the crop or livestock. Irs e file 2011 Furnish at least half the tools, equipment, and livestock used in the production activities. Irs e file 2011 Advise or consult with your tenant. Irs e file 2011 Inspect the production activities periodically. Irs e file 2011 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 e file 2011 You work 100 hours or more spread over a period of 5 weeks or more in activities connected with agricultural production. Irs e file 2011 You do things that, considered in their totality, show you are materially and significantly involved in the production of the farm commodities. Irs e file 2011 These tests may be used as general guides for determining whether you are a material participant. Irs e file 2011 Example. Irs e file 2011 Drew Houston agrees to produce a crop on J. Irs e file 2011 Clarke's cotton farm, with each receiving half the proceeds. Irs e file 2011 Clarke advises Houston when to plant, spray, and pick the cotton. Irs e file 2011 During the growing season, Clarke inspects the crop every few days to determine whether Houston is properly taking care of the crop. Irs e file 2011 Houston furnishes all labor needed to grow and harvest the crop. Irs e file 2011 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 e file 2011 The income Clarke receives from his cotton farm is included in his self-employment earnings. Irs e file 2011 Methods for Figuring Net Earnings There are three ways to figure your net earnings from self-employment. Irs e file 2011 The regular method. Irs e file 2011 The farm optional method. Irs e file 2011 The nonfarm optional method. Irs e file 2011 You must use the regular method unless you are eligible to use one or both of the optional methods. Irs e file 2011 See Figure 12-1 , shown later. Irs e file 2011 Figure 12-1. Irs e file 2011 Can I Use the Optional Methods? Please click here for the text description of the image. Irs e file 2011 Figure 12–1. Irs e file 2011 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 e file 2011 You want to receive credit for social security benefit coverage. Irs e file 2011 You incurred child or dependent care expenses for which you could claim a credit. Irs e file 2011 (An optional method may increase your earned income, which could increase your credit. Irs e file 2011 ) You are entitled to the earned income credit. Irs e file 2011 (An optional method may increase your earned income, which could increase your credit. Irs e file 2011 ) You are entitled to the additional child tax credit. Irs e file 2011 (An optional method may increase your earned income, which could increase your credit. Irs e file 2011 ) Effects of using an optional method. Irs e file 2011   Using an optional method could increase your SE tax. Irs e file 2011 Paying more SE tax may result in you getting higher social security disability or retirement benefits. Irs e file 2011   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 e file 2011   The optional methods may be used only to figure your SE tax. Irs e file 2011 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 e file 2011 Regular Method Multiply your total self-employment earnings by 92. Irs e file 2011 35% (. Irs e file 2011 9235) to get your net earnings under the regular method. Irs e file 2011 See Short Schedule SE, line 4, or Long Schedule SE, line 4a. Irs e file 2011 Net earnings figured using the regular method are also called “actual net earnings. Irs e file 2011 ” Farm Optional Method Use the farm optional method only for self-employment earnings from a farming business. Irs e file 2011 You can use this method if you meet either of the following tests. Irs e file 2011 Your gross farm income is $6,960 or less. Irs e file 2011 Your net farm profits are less than $5,024. Irs e file 2011 Gross farm income. Irs e file 2011   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 e file 2011 Net farm profits. Irs e file 2011   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 e file 2011 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 e file 2011 For more information, see Partnership income or loss , earlier. Irs e file 2011 Figuring farm net earnings. Irs e file 2011   If you meet either of the two tests explained above, use Table 12-1. Irs e file 2011 Figuring Farm Net Earnings , to figure your net earnings from self-employment under the farm optional method. Irs e file 2011 Table 12-1. Irs e file 2011 Figuring Farm Net Earnings IF your gross farm income  is. Irs e file 2011 . Irs e file 2011 . Irs e file 2011 THEN your net earnings are equal to. Irs e file 2011 . Irs e file 2011 . Irs e file 2011 $6,960 or less Two-thirds of your gross farm income. Irs e file 2011 More than $6,960 $4,640 Optional method can reduce or eliminate SE tax. Irs e file 2011   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 e file 2011 Your actual net earnings are your net earnings figured using the regular method, explained earlier. Irs e file 2011 Example. Irs e file 2011 Your gross farm income is $540 and your net farm profit is $460. Irs e file 2011 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 e file 2011 35% of $460). Irs e file 2011 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 e file 2011 Nonfarm Optional Method This is an optional method available for determining net earnings from nonfarm self-employment, much like the farm optional method. Irs e file 2011 If you are also engaged in a nonfarm business, you may be able to use this method to figure your nonfarm net earnings. Irs e file 2011 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 e file 2011 For more information about the nonfarm optional method, see Publication 334. Irs e file 2011 You cannot combine farm and nonfarm self-employment earnings to figure your net earnings under either of the optional methods. Irs e file 2011 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 e file 2011 You can report less than your total actual farm and nonfarm net earnings but not less than actual nonfarm net earnings. Irs e file 2011 If you use both optional methods, you can report no more than $4,640 as your combined net earnings from self-employment. Irs e file 2011 Reporting Self-Employment Tax Use Schedule SE (Form 1040) to figure and report your SE tax. Irs e file 2011 Then, enter the SE tax on line 56 of Form 1040 and attach Schedule SE to Form 1040. Irs e file 2011 Most taxpayers can use Section A–Short Schedule SE to figure their SE tax. Irs e file 2011 However, certain taxpayers must use Section B–Long Schedule SE. Irs e file 2011 Use the chart on page 1 of Schedule SE to find out which one to use. Irs e file 2011 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 e file 2011 Deduction for employer-equivalent portion of self-employment tax. Irs e file 2011   You can deduct the employer-equivalent portion of your SE tax in figuring your adjusted gross income. Irs e file 2011 This deduction only affects your income tax. Irs e file 2011 It does not affect either your net earnings from self-employment or your SE tax. Irs e file 2011   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 e file 2011 Joint return. Irs e file 2011   Even if you file a joint return, you cannot file a joint Schedule SE. Irs e file 2011 This is true whether one spouse or both spouses have self-employment earnings. Irs e file 2011 Your spouse is not considered self-employed just because you are. Irs e file 2011 If both of you have self-employment earnings, each of you must complete a separate Schedule SE. Irs e file 2011 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 e file 2011 Attach both schedules to the joint return. Irs e file 2011 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 e file 2011 Prev  Up  Next   Home   More Online Publications
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The Irs E File 2011

Irs e file 2011 Publication 225 - Introductory Material Table of Contents IntroductionOrdering forms and publications. Irs e file 2011 Tax questions. Irs e file 2011 Future Developments What's New for 2013 What's New for 2014 Reminders Introduction You are in the business of farming if you cultivate, operate, or manage a farm for profit, either as owner or tenant. Irs e file 2011 A farm includes livestock, dairy, poultry, fish, fruit, and truck farms. Irs e file 2011 It also includes plantations, ranches, ranges, and orchards. Irs e file 2011 This publication explains how the federal tax laws apply to farming. Irs e file 2011 Use this publication as a guide to figure your taxes and complete your farm tax return. Irs e file 2011 If you need more information on a subject, get the specific IRS tax publication covering that subject. Irs e file 2011 We refer to many of these free publications throughout this publication. Irs e file 2011 See chapter 16 for information on ordering these publications. Irs e file 2011 The explanations and examples in this publication reflect the Internal Revenue Service's interpretation of tax laws enacted by Congress, Treasury regulations, and court decisions. Irs e file 2011 However, the information given does not cover every situation and is not intended to replace the law or change its meaning. Irs e file 2011 This publication covers subjects on which a court may have made a decision more favorable to taxpayers than the interpretation of the Service. Irs e file 2011 Until these differing interpretations are resolved by higher court decisions, or in some other way, this publication will continue to present the interpretation of the Service. Irs e file 2011 The IRS Mission. Irs e file 2011   Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all. Irs e file 2011 Comments and suggestions. Irs e file 2011   We welcome your comments about this publication and your suggestions for future editions. Irs e file 2011   You can write to us at the following address: Internal Revenue Service Business Forms and Publications Branch SE:W:CAR:MP:T:B 1111 Constitution Ave. Irs e file 2011 NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Irs e file 2011 Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Irs e file 2011   You can email us at taxforms@irs. Irs e file 2011 gov. Irs e file 2011 Please put “Publications Comment” on the subject line. Irs e file 2011 You can also send us comments from www. Irs e file 2011 irs. Irs e file 2011 gov/formspubs/, select “Comment on Tax Forms and Publications” under “More Information. Irs e file 2011 ”   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. Irs e file 2011 Ordering forms and publications. Irs e file 2011   Visit www. Irs e file 2011 irs. Irs e file 2011 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. Irs e file 2011 Internal Revenue Service 1201 N. Irs e file 2011 Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Irs e file 2011   If you have a tax question, check the information available on IRS. Irs e file 2011 gov or call 1-800-829-1040. Irs e file 2011 We cannot answer tax questions sent to either of the above addresses. Irs e file 2011 Comments on IRS enforcement actions. Irs e file 2011   The Small Business and Agricultural Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were established to receive comments from small business about federal agency enforcement actions. Irs e file 2011 The Ombudsman will annually evaluate the enforcement activities of each agency and rate its responsiveness to small business. Irs e file 2011 If you wish to comment on the enforcement actions of the IRS, you can: Call 1-888-734-3247, Fax your comments to 202-481-5719, Write to Office of the National Ombudsman U. Irs e file 2011 S. Irs e file 2011 Small Business Administration 409 3rd Street, S. Irs e file 2011 W. Irs e file 2011  Washington, DC 20416 Send an email to ombudsman@sba. Irs e file 2011 gov, or Download the appraisal form at  www. Irs e file 2011 sba. Irs e file 2011 gov/ombudsman. Irs e file 2011 Treasury Inspector General for Tax Administration. Irs e file 2011   If you want to confidentially report misconduct, waste, fraud, or abuse by an IRS employee, you can call 1-800-366-4484 (1-800-877-8339 for TTY/TDD users). Irs e file 2011 You can remain anonymous. Irs e file 2011 Farm tax classes. Irs e file 2011   Many state Cooperative Extension Services conduct farm tax workshops in conjunction with the IRS. Irs e file 2011 Contact your county extension office for more information. Irs e file 2011 Rural tax education website. Irs e file 2011   The Rural Tax Education website is a source for information concerning agriculturally related income and deductions and self-employment tax. Irs e file 2011 The website is available for farmers and ranchers, other agricultural producers, Extension educators, and any one interested in learning about the tax side of the agricultural community. Irs e file 2011 Members of the National Farm Income Tax Extension Committee are contributors for the website and the website is hosted by Utah State University Cooperative Extension. Irs e file 2011 You can visit the website at www. Irs e file 2011 ruraltax. Irs e file 2011 org. Irs e file 2011 Future Developments The IRS has created a page on IRS. Irs e file 2011 gov for information about Publication 225, at  www. Irs e file 2011 irs. Irs e file 2011 gov/pub225. Irs e file 2011 Information about recent developments affecting Publication 225 will be posted on that page. Irs e file 2011 What's New for 2013 The following items highlight a number of administrative and tax law changes for 2013. Irs e file 2011 They are discussed in more detail throughout the publication. Irs e file 2011 Standard mileage rate. Irs e file 2011  For 2013, the standard mileage rate for the cost of operating your car, van, pickup, or panel truck for each mile of business use is 56. Irs e file 2011 5 cents. Irs e file 2011 See chapter 4. Irs e file 2011 Simplified method for business use of home deduction. Irs e file 2011  The IRS now provides a simplified method to determine your expenses for business use of your home. Irs e file 2011 For more information, see Schedule C (Form 1040), Part II, and its instructions. Irs e file 2011 See chapter 4. Irs e file 2011 Increased section 179 expense deduction dollar limits. Irs e file 2011  The maximum amount you can elect to deduct for most section 179 property you placed in service in 2013 is $500,000. Irs e file 2011 This limit is reduced by the amount by which the cost of the property placed in service during the tax year exceeds $2 million. Irs e file 2011 See chapter 7. Irs e file 2011 Extension of special depreciation allowance for certain qualified property acquired after December 31, 2007. Irs e file 2011  You may be able to take a 50% special depreciation allowance for certain qualified property acquired after December 31, 2007, and placed in service before January 1, 2014. Irs e file 2011 See chapter 7. Irs e file 2011 Expiration of the 3-year recovery period for certain race horses. Irs e file 2011 . Irs e file 2011  The 3-year recovery period for race horses two years old or younger will expire for such horses placed in service after December 31, 2013. Irs e file 2011 See chapter 7. Irs e file 2011 Tax rates. Irs e file 2011  For tax years beginning in 2013, the social security part of the self-employment tax increases from 10. Irs e file 2011 4% to 12. Irs e file 2011 4%. Irs e file 2011 As a result, the self-employment tax is increased from 13. Irs e file 2011 3% to 15. Irs e file 2011 3%. Irs e file 2011 See chapter 12. Irs e file 2011 Maximum net earnings. Irs e file 2011  The maximum net self-employment earnings subject to the social security part (12. Irs e file 2011 4%) of the self-employment tax increased to $113,700 for 2013. Irs e file 2011 There is no maximum limit on earnings subject to the Medicare part (2. Irs e file 2011 9%). Irs e file 2011 See chapter 12. Irs e file 2011 Net investment income tax. Irs e file 2011  For tax years beginning in 2013, individuals, estates, and trusts may be subject to the net investment income tax (NIIT). Irs e file 2011 If you are a trader in financial instruments and commodities and required to file Schedule C (Form 1040), your investment income (for purposes of the NIIT) may be reduced by your interest and other investment expenses to the extent those expenses are not used to reduce your self-employment income. Irs e file 2011 For information about NIIT and the special rule for traders in financial instruments and commodities, see the Instructions for Form 8960. Irs e file 2011 Social Security and Medicare Tax for 2013. Irs e file 2011  The employee tax rate for social security is 6. Irs e file 2011 2%. Irs e file 2011 The employer tax rate for social security remains unchanged at 6. Irs e file 2011 2%. Irs e file 2011 The social security wage base limit is $113,700. Irs e file 2011 The Medicare tax rate is 1. Irs e file 2011 45% each for the employee and employer, unchanged from 2012. Irs e file 2011 There is no wage base limit for Medicare tax. Irs e file 2011 See chapter 13. Irs e file 2011 Additional Medicare Tax. Irs e file 2011  For tax years beginning in 2013, a 0. Irs e file 2011 9% Additional Medicare Tax applies to your Medicare wages, Railroad Tax Act (RRTA) compensation, and self-employment income above a threshold amount. Irs e file 2011 Use Form 8959, Additional Medicare Tax, to figure this tax. Irs e file 2011 For more information, see the Instructions for Form 8959 and the Instructions for Schedule SE (Form 1040). Irs e file 2011 In addition to withholding Medicare tax at 1. Irs e file 2011 45%, you must withhold a 0. Irs e file 2011 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Irs e file 2011 You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Irs e file 2011 Additional Medicare Tax is only imposed on the employee. Irs e file 2011 There is no employer share of Additional Medicare Tax. Irs e file 2011 All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. Irs e file 2011 For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E), Employer's Tax Guide. Irs e file 2011 For more information on Additional Medicare Tax, visit IRS. Irs e file 2011 gov and enter “Additional Medicare Tax” in the search box. Irs e file 2011 See chapter 13. Irs e file 2011 Leave-Based donation programs to aid victims of Hurricane Sandy. Irs e file 2011  Under these programs, employees may donate their vacation, sick, or personal leave in exchange for employer cash payments made before January 1, 2014, to qualified tax-exempt organizations providing relief for the victims of Hurricane Sandy. Irs e file 2011 The donated leave will not be included in the income or wages of the employee. Irs e file 2011 The employer may deduct the cash payments as business expenses or charitable contributions. Irs e file 2011 See chapter 13. Irs e file 2011 Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans extended. Irs e file 2011  The work opportunity tax credit is now available for eligible unemployed veterans who begin work before January 1, 2014. Irs e file 2011 Qualified tax-exempt organizations that hire eligible unemployed veterans can claim the work opportunity tax credit against their payroll tax liability using Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. Irs e file 2011 For more information, visit IRS. Irs e file 2011 gov and enter “work opportunity credit” in the search box. Irs e file 2011 See chapter 13. Irs e file 2011 Estimated tax. Irs e file 2011  For tax years beginning in 2013, the Net Investment Income Tax (NIIT) may need to be included when calculating your estimated tax. Irs e file 2011 Also, when figuring your estimated tax, you may need to include the 0. Irs e file 2011 9% Additional Medicare Tax applicable to Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income above the threshold amount based on your filing status. Irs e file 2011 For more information, see Publication 505. Irs e file 2011 What's New for 2014 Maximum net earnings. Irs e file 2011  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 e file 2011 See chapter 12. Irs e file 2011 Social security and Medicare tax for 2014. Irs e file 2011  The employee and employer tax rates for social security and the maximum amount of wages subject to social security tax for 2014 will be discussed in Publication 51 (Circular A), Agricultural Employer's Tax Guide (For use in 2014). Irs e file 2011 The Medicare tax rate for 2014 will also be discussed in Publication 51 (Circular A) (For use in 2014). Irs e file 2011 There is no limit on the amount of wages subject to Medicare tax. Irs e file 2011 See chapter 13. Irs e file 2011 Reminders The following reminders and other items may help you file your tax return. Irs e file 2011   IRS e-file (Electronic Filing) You can file your tax returns electronically using an IRS e-file option. Irs e file 2011 The benefits of IRS e-file include faster refunds, increased accuracy, and acknowledgment of IRS receipt of your return. Irs e file 2011 You can use one of the following IRS e-file options. Irs e file 2011 Use an authorized IRS e-file provider. Irs e file 2011 Use a personal computer. Irs e file 2011 Visit a Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) site. Irs e file 2011 For details on these fast filing methods, see your income tax package. Irs e file 2011 Principal agricultural activity codes. Irs e file 2011  You must enter on line B of Schedule F (Form 1040) a code that identifies your principal agricultural activity. Irs e file 2011 It is important to use the correct code because this information will identify market segments of the public for IRS Taxpayer Education programs. Irs e file 2011 The U. Irs e file 2011 S. Irs e file 2011 Census Bureau also uses this information for its economic census. Irs e file 2011 See the list of Principal Agricultural Activity Codes on page 2 of Schedule F (Form 1040). Irs e file 2011 Publication on employer identification numbers (EIN). Irs e file 2011  Publication 1635, Understanding Your Employer Identification Number, provides general information on employer identification numbers. Irs e file 2011 Topics include how to apply for an EIN and how to complete Form SS-4. Irs e file 2011 Change of address. Irs e file 2011  If you change your home address, you should use Form 8822, Change of Addres, to notify the IRS. Irs e file 2011 If you change your business address, you should use Form 8822-B, Change of Address or Responsible Party — Business, to notify the IRS. Irs e file 2011 Be sure to include your suite, room, or other unit number. Irs e file 2011 Reportable transactions. Irs e file 2011  You must file Form 8886, Reportable Transaction Disclosure Statement, to report certain transactions. Irs e file 2011 You may have to pay a penalty if you are required to file Form 8886 but do not do so. Irs e file 2011 Reportable transactions include (1) transactions the same as or substantially similar to tax avoidance transactions identified by the IRS, (2) transactions offered to you under conditions of confidentiality and for which you paid an advisor a minimum fee, (3) transactions for which you have or a related party has a right to a full or partial refund of fees if all or part of the intended tax consequences from the transaction are not sustained, (4) transactions that result in losses of at least $2 million in any single year or $4 million in any combination of years, and (5) transactions with asset holding periods of 45 days or less and that result in a tax credit of more than $250,000. Irs e file 2011 For more information, see the Instructions for Form 8886. Irs e file 2011 Form W-4 for 2014. Irs e file 2011  You should make new Forms W-4 available to your employees and encourage them to check their income tax withholding for 2014. Irs e file 2011 Those employees who owed a large amount of tax or received a large refund for 2013 may need to submit a new Form W-4. Irs e file 2011 See Publication 919, How Do I Adjust My Tax Withholding. Irs e file 2011 Form 1099-MISC. Irs e file 2011  Generally, file Form 1099-MISC if you pay at least $600 in rents, services, and other miscellaneous payments in your farming business to an individual (for example, an accountant, an attorney, or a veterinarian) who is not your employee. Irs e file 2011 Limited Liability Company (LLC). Irs e file 2011  For purposes of this publication, a limited liability company (LLC) is a business entity organized in the United States under state law. Irs e file 2011 Unlike a partnership, all of the members of an LLC have limited personal liability for its debts. Irs e file 2011 An LLC may be classified for federal income tax purposes as a partnership, corporation, or an entity disregarded as separate from its owner by applying the rules in Regulations section 301. Irs e file 2011 7701-3. Irs e file 2011 See Publication 3402 for more details. Irs e file 2011 Photographs of missing children. Irs e file 2011  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Irs e file 2011 Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Irs e file 2011 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. Irs e file 2011 Prev  Up  Next   Home   More Online Publications