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Irs Forms Amended Return

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Irs Forms Amended Return

Irs forms amended return Publication 531 - Introductory Material Table of Contents Future Developments What's New Reminder IntroductionOrdering forms and publications. Irs forms amended return Tax questions. Irs forms amended return Future Developments For the latest information about developments related to Publication 531, such as legislation enacted after this publication was published, go to www. Irs forms amended return irs. Irs forms amended return gov/pub531. Irs forms amended return What's New Additional Medicare Tax. Irs forms amended return  Beginning in 2013, a 0. Irs forms amended return 9% Additional Medicare Tax applies to Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. Irs forms amended return An employer is required to withhold Additional Medicare Tax on any Medicare wages or RRTA compensation it pays to an employee in excess of $200,000 in a calendar year without regard to the employee's filing status. Irs forms amended return An employer is required to begin withholding Additional Medicare Tax in the pay period in which it pays wages or compensation in excess of $200,000 to an employee and continue to withhold it until the end of the calendar year. Irs forms amended return Additional Medicare Tax is only imposed on the employee. Irs forms amended return There is no employer share of Additional Medicare Tax. Irs forms amended return All wages and compensation that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. Irs forms amended return Tips are subject to Additional Medicare Tax withholding, if, in combination with other wages paid by the employer, they exceed the $200,000 withholding threshold. Irs forms amended return Similarly, tips are subject to Additional Medicare Tax withholding, if, in combination with other RRTA compensation paid by the employer, they exceed the $200,000 withholding threshold. Irs forms amended return For more information on Additional Medicare Tax, go to www. Irs forms amended return irs. Irs forms amended return gov and enter “Additional Medicare Tax” in the search box. Irs forms amended return Reminder Photographs of missing children. Irs forms amended return  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Irs forms amended return Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Irs forms amended return 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 forms amended return Introduction This publication is for employees who receive tips. Irs forms amended return All tips you receive are income and are subject to federal income tax. Irs forms amended return You must include in gross income all tips you receive directly, charged tips paid to you by your employer, and your share of any tips you receive under a tip-splitting or tip-pooling arrangement. Irs forms amended return The value of noncash tips, such as tickets, passes, or other items of value, is also income and subject to tax. Irs forms amended return Reporting your tip income correctly is not difficult. Irs forms amended return You must do three things. Irs forms amended return Keep a daily tip record. Irs forms amended return Report tips to your employer. Irs forms amended return Report all your tips on your income tax return. Irs forms amended return  This publication will explain these three things and show you what to do on your tax return if you have not done the first two. Irs forms amended return This publication will also show you how to treat allocated tips. Irs forms amended return Comments and suggestions. Irs forms amended return   We welcome your comments about this publication and your suggestions for future editions. Irs forms amended return   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Irs forms amended return NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Irs forms amended return Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Irs forms amended return   You can send your comments from www. Irs forms amended return irs. Irs forms amended return gov/formspubs/. Irs forms amended return Click on “More Information” and then on “Comment on Tax Forms and Publications”. Irs forms amended return   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 forms amended return Ordering forms and publications. Irs forms amended return   Visit www. Irs forms amended return irs. Irs forms amended return 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 forms amended return Internal Revenue Service 1201 N. Irs forms amended return Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Irs forms amended return   If you have a tax question, check the information available on IRS. Irs forms amended return gov or call 1-800-829-1040. Irs forms amended return We cannot answer tax questions sent to either of the above addresses. Irs forms amended return Prev  Up  Next   Home   More Online Publications
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The Department of Housing and Urban Development administers programs that provide housing and community development assistance. The Department also works to ensure fair and equal housing opportunity for all.

The Irs Forms Amended Return

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