Reporting Self-Employment Tax

Use Schedule SE (Form 1040) to figure SE tax. Enter the tax on line 52 of Form 1040 and attach Schedule SE to Form 1040.

If you have to pay SE tax, you must file Form 1040 (with Schedule SE attached) even if you do not otherwise have to file a federal income tax return.

Self-employment tax deduction. You can deduct half of your SE tax in figuring your adjusted gross income. This adjustment only affects your income tax. It does not affect either your net earnings from self-employment or your SE tax.

To deduct the tax, enter on Form 1040, line 27, the amount shown on the "One-half of self-employment tax" line of Schedule SE.

Long Schedule SE. Most taxpayers can use Section A-Short Schedule SE to figure their self-employment tax. However, the following taxpayers must use Section B-Long Schedule SE .

• Individuals whose total wages and tips subject to social security (or railroad retirement (tier 1)) tax plus net earnings from self-employment are more than $76,200.
• Ministers, members of religious orders, and Christian Science practitioners not taxed on earnings from these sources (with IRS approval) who owe SE tax on other earnings.
• Employees who earned wages reported on Form W-2 of $108.28 or more working for churches or church organizations that elected an exemption from employer social security and Medicare taxes.
• Individuals with tip income subject to social security and Medicare taxes that was not reported to their employers.
• Individuals who use one of the optional methods to figure net earnings from self-employment.

Joint returns. If you file a joint return, you cannot file a joint Schedule SE (Form 1040). This is true whether one spouse or both spouses have SE income. Your spouse is not considered self-employed just because you are. If both of you have net earnings from self-employment, each of you must complete a separate Schedule SE (Form 1040). Attach both schedules to the joint return. If you and your spouse operate a business as a partnership, see Husband and wife partners, earlier, under Who Must Pay Self-Employment Tax?

Community income. If any of the income from a farm or business other than a partnership is community income under state law, it is included in the net earnings of the spouse carrying on the trade or business. The identity of the spouse carrying on the trade or business is determined by the facts in each case.

Community income from a partnership. 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 income, treat your share as your net earnings from self-employment. Do not treat any of your share as net earnings of your spouse.

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