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Amended Tax Form

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Amended Tax Form

Amended tax form Publication 596 - Introductory Material Table of Contents Future Developments What is the EIC? Can I Claim the EIC? Do I Need This Publication? Do I Have To Have A Child To Qualify For The EIC? How Do I Figure the Amount of EIC? How Can I Quickly Locate Specific information? Is There Help Online? What's New for 2013 Reminders Future Developments For the latest information about developments related to Publication 596, such as legislation enacted after it was published, go to www. Amended tax form irs. Amended tax form gov/pub596. Amended tax form What is the EIC? The earned income credit (EIC) is a tax credit for certain people who work and have earned income under $51,567. Amended tax form A tax credit usually means more money in your pocket. Amended tax form It reduces the amount of tax you owe. Amended tax form The EIC may also give you a refund. Amended tax form Can I Claim the EIC? To claim the EIC, you must meet certain rules. Amended tax form These rules are summarized in Table 1. Amended tax form Table 1. Amended tax form Earned Income Credit in a Nutshell First, you must meet all the rules in this column. Amended tax form Second, you must meet all the rules in one of these columns, whichever applies. Amended tax form Third, you must meet the rule in this column. Amended tax form Chapter 1. Amended tax form  Rules for Everyone Chapter 2. Amended tax form  Rules If You Have a Qualifying Child Chapter 3. Amended tax form  Rules If You Do Not Have a Qualifying Child Chapter 4. Amended tax form  Figuring and Claiming the EIC 1. Amended tax form Your adjusted gross income (AGI) must be less than:  • $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children,  • $43,038 ($48,378 for married filing jointly) if you have two qualifying children,  • $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or   • $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Amended tax form 2. Amended tax form You must have a valid social security number. Amended tax form   3. Amended tax form Your filing status cannot be Married filing separately. Amended tax form   4. Amended tax form You must be a U. Amended tax form S. Amended tax form citizen or resident alien all year. Amended tax form   5. Amended tax form You cannot file Form 2555 or Form 2555-EZ (relating to foreign earned income). Amended tax form   6. Amended tax form Your investment income must be $3,300 or less. Amended tax form    7. Amended tax form You must have earned income. Amended tax form 8. Amended tax form Your child must meet the relationship, age, residency, and joint return tests. Amended tax form   9. Amended tax form Your qualifying child cannot be used by more than one person to claim the EIC. Amended tax form   10. Amended tax form You cannot be a qualifying child of another person. Amended tax form 11. Amended tax form You must be at least age 25 but under age 65. Amended tax form    12. Amended tax form You cannot be the dependent of another person. Amended tax form   13. Amended tax form You cannot be a qualifying child of another person. Amended tax form   14. Amended tax form You must have lived in the United States more than half of the year. Amended tax form 15. Amended tax form Your earned income must be less than:  • $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children,  • $43,038 ($48,378 for married filing jointly) if you have two qualifying children,  • $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or  • $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Amended tax form Do I Need This Publication? Certain people who file Form 1040 must use Worksheet 1 in this publication, instead of Step 2 in their Form 1040 instructions, when they are checking whether they can take the EIC. Amended tax form You are one of those people if any of the following statements are true for 2013. Amended tax form You are filing Schedule E (Form 1040). Amended tax form You are reporting income from the rental of personal property not used in a trade or business. Amended tax form You are reporting income on Form 1040, line 21, from Form 8814 (relating to election to report child's interest and dividends). Amended tax form You are reporting an amount on Form 1040, line 13, that includes an amount from Form 4797. Amended tax form If none of the statements above apply to you, your tax form instructions have all the information you need to find out if you can claim the EIC and to figure the amount of your EIC. Amended tax form You do not need this publication. Amended tax form But you can read it to find out whether you can take the EIC and to learn more about the EIC. Amended tax form Do I Have To Have A Child To Qualify For The EIC? No, you can qualify for the EIC without a qualifying child if you are at least age 25 but under age 65 and your earned income is less than $14,340 ($19,680 if married filing jointly). Amended tax form See chapter 3. Amended tax form How Do I Figure the Amount of EIC? If you can claim the EIC, you can either have the IRS figure the amount of your credit, or you can figure it yourself. Amended tax form To figure it yourself, you can complete a worksheet in the instructions for the form you file. Amended tax form To find out how to have the IRS figure it for you, see chapter 4. Amended tax form How Can I Quickly Locate Specific information? You can use the index to look up specific information. Amended tax form In most cases, index entries will point you to headings, tables, or a worksheet. Amended tax form Is There Help Online? Yes. Amended tax form You can use the EITC Assistant at www. Amended tax form irs. Amended tax form gov/eitc to find out if you may be eligible for the credit. Amended tax form The EITC Assistant is available in English and Spanish. Amended tax form What's New for 2013 Earned income amount is more. Amended tax form The maximum amount of income you can earn and still get the credit has increased. Amended tax form You may be able to take the credit if: You have three or more qualifying children and you earned less than $46,227 ($51,567 if married filing jointly), You have two qualifying children and you earned less than $43,038 ($48,378 if married filing jointly), You have one qualifying child and you earned less than $37,870 ($43,210 if married filing jointly), or You do not have a qualifying child and you earned less than $14,340 ($19,680 if married filing jointly). Amended tax form Your adjusted gross income also must be less than the amount in the above list that applies to you. Amended tax form For details, see Rules 1 and 15. Amended tax form Investment income amount is more. Amended tax form The maximum amount of investment income you can have and still get the credit has increased to $3,300. Amended tax form See Rule 6—Your Investment Income Must Be $3,300 or Less . Amended tax form Reminders Increased EIC on certain joint returns. Amended tax form . Amended tax form  A married person filing a joint return may get more EIC than someone with the same income but a different filing status. Amended tax form As a result, the EIC table has different columns for married persons filing jointly than for everyone else. Amended tax form When you look up your EIC in the EIC Table, be sure to use the correct column for your filing status and the number of children you have. Amended tax form Earned income credit has no effect on certain welfare benefits. Amended tax form  Any refund you receive because of the EIC cannot be counted as income when determining whether you or anyone else is eligible for benefits or assistance, or how much you or anyone else can receive, under any federal program or under any state or local program financed in whole or in part with federal funds. Amended tax form These programs include the following. Amended tax form Temporary Assistance for Needy Families (TANF). Amended tax form Medicaid. Amended tax form Supplemental security income (SSI). Amended tax form Supplemental Nutrition Assistance Program (food stamps). Amended tax form Low-income housing. Amended tax form In addition, when determining eligibility, the refund cannot be counted as a resource for at least 12 months after you receive it. Amended tax form Check with your local benefit coordinator to find out if your refund will affect your benefits. Amended tax form Do not overlook your state credit. Amended tax form  If you can claim the EIC on your federal income tax return, you may be able to take a similar credit on your state or local income tax return. Amended tax form For a list of states that offer a state EIC, go to www. Amended tax form irs. Amended tax form gov/eitc. Amended tax form EIC questioned by IRS. Amended tax form  The IRS may ask you to provide documents to prove you are entitled to claim the EIC. Amended tax form We will tell you what documents to send us. Amended tax form These may include: birth certificates, school records, etc. Amended tax form The process of establishing your eligibility will delay your refund. Amended tax form Spanish version of Publication 596. Amended tax form  You can order Publicación 596SP, Crédito por Ingreso del Trabajo, from the IRS. Amended tax form It is a Spanish translation of Publication 596. Amended tax form See How To Get Tax Help to find out how to order this and other IRS forms and publications. Amended tax form Photographs of missing children. Amended tax form  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Amended tax form Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Amended tax form 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. Amended tax form Comments and suggestions. Amended tax form  We welcome your comments about this publication and your suggestions for future editions. Amended tax form You can write to us at the following address:  Internal Revenue Service Individual Forms and Publications Branch 1111 Constitution Ave. Amended tax form NW, IR-6526 Washington, DC 20224 We respond to many letters by telephone. Amended tax form Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Amended tax form You can send your comments from www. Amended tax form irs. Amended tax form gov/formspubs/. Amended tax form Click on “More Information” and then on “Comment on Tax Forms and Publications. Amended tax form ” 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. Amended tax form Ordering forms and publications. Amended tax form  Visit www. Amended tax form irs. Amended tax form 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. Amended tax form  Internal Revenue Service 1201 N. Amended tax form Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Amended tax form  If you have a tax question, check the information available on IRS. Amended tax form gov or call 1-800-829-1040. Amended tax form We cannot answer tax questions sent to either of the above addresses. Amended tax form Prev  Up  Next   Home   More Online Publications
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The Amended Tax Form

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