Reporting Self-Employment Tax

Use Schedule SE (Form 1040) to figure and report your SE tax. Then enter the SE tax on line 53 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 deduction 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 "Deduction for one-half of self-employment tax" line of the Schedule SE.

Long Schedule SE. Most taxpayers can use Section A-Short Schedule SE to figure their SE 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 tax plus earnings subject to SE tax are more than $80,400.
• 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 or Medicare taxes that was not reported to their employers.
• Individuals who use one of the optional methods to figure earnings subject to SE tax.

Joint return. If you file a joint return, you cannot file a joint Schedule SE. This is true whether one spouse or both spouses have earnings subject to SE tax. Your spouse is not considered self-employed just because you are. If both of you have earnings subject to SE tax, each of you must complete a separate Schedule SE. 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. 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 earnings subject to SE tax 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 earnings subject to SE tax. Do not treat any of your share as earnings of your spouse.

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