Instructions for Form 1040-SS |
2006 Tax Year |
This is archived information that pertains only to the 2006 Tax Year. If you are looking for information for the current tax year, go to the Tax Prep Help Area.
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For 2006, the maximum amount of self-employment income subject to social security tax is $94,200.
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The rules for determining whether you are a bona fide resident of a possession have changed. For details, see Pub. 570, Tax
Guide for
Individuals With Income From U.S. Possessions.
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If you are a debtor in a chapter 11 bankruptcy case, you must pay self-employment tax on your net earnings from self-employment,
even though
the bankruptcy estate pays the income tax on your net profit. See Chapter 11 Bankruptcy Cases on page 3.
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If you paid the federal excise tax on your U.S. long distance or bundled telephone service, you may be able to request a credit.
See the
instructions for line 10 on page 4.
Residents of the U.S. Virgin Islands (USVI), Guam, American Samoa, the Commonwealth of the Northern Mariana Islands (CNMI),
and the Commonwealth of
Puerto Rico (Puerto Rico) use Form 1040-SS to:
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Report net earnings from self-employment and pay self-employment (SE) tax. The Social Security Administration (SSA) uses this
information to
figure your benefits under the social security program. SE tax applies no matter how old you are and even if you already are
receiving social security
or Medicare benefits.
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Report and pay household employment taxes.
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Report and pay employee social security and Medicare tax on unreported tips or uncollected social security and Medicare tax
on tips or
group-term life insurance (see the instructions for Part I, line 5, on page 4).
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Claim excess social security tax withheld.
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Claim the additional child tax credit (bona fide residents of Puerto Rico only).
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Claim the health coverage tax credit (bona fide residents of Puerto Rico only).
You may also be required to file an income tax return with the government of Guam, American Samoa, the USVI, the CNMI, or
Puerto Rico. Check with
your local tax office for more details.
See the instructions for Schedule C (Form 1040), Profit or Loss From Business, and Schedule F (Form 1040), Profit or Loss
From Farming, for
information on business and farm income and expenses. Also, see Pub. 334, Tax Guide for Small Business (For Individuals Who
Use Schedule C or C-EZ),
and Pub. 225, Farmer's Tax Guide.
For details on 2006 tax law changes, see Pub. 553, Highlights of 2006 Tax Changes.
If you expect to owe SE tax of $1,000 or more for 2007, you may have to make estimated tax payments. Use Form 1040-ES, Estimated
Tax for
Individuals, to make estimated tax payments.
You must file Form 1040-SS if:
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You, or your spouse if filing a joint return, had net earnings from self-employment (from other than church employee income)
of $400 or more
(or you had church employee income of $108.28 or more—see Church Employees on page 2);
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You do not have to file Form 1040 with the United States; and
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You are a resident of:
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Guam,
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American Samoa,
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The USVI,
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The CNMI, or
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Puerto Rico. (You may file either Form 1040-PR or Form 1040-SS.)
Even if you have a loss or little income from self-employment, it may benefit you to file Form 1040-SS and use either "optional
method" in Part VI.
See page 7.
If (2) and (3) above apply, you also must file Form 1040-SS (or Form 1040-PR in Spanish if you are a resident of Puerto Rico)
to:
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Report and pay household employment taxes.
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Report and pay employee social security and Medicare tax on unreported tips or uncollected social security and Medicare tax
on tips or
group-term life insurance (see the instructions for Part I, line 5, on page 4).
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Claim excess social security tax withheld.
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Claim the additional child tax credit (bona fide residents of Puerto Rico only).
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Claim the health coverage tax credit (bona fide residents of Puerto Rico only).
If you file on a calendar year basis, file by April 16, 2007. If you file on a fiscal year basis, file by the 15th day of
the 4th month after the
close of your fiscal year.
Internal Revenue Service Center, Austin, TX 73301-0215.
Pay by Check or Money Order
Enclose your check or money order for the full amount due with Form 1040-SS. Make it payable to the “United States Treasury.” Do not send
cash. Enter “2006 Form 1040-SS” and your name, address, daytime phone number, and social security number (SSN) on your payment. If you are filing
a joint return, enter the SSN shown first on your Form 1040-SS.
To help process your payment, enter the amount on the right side of the check like this: $ 1040-SS.XX. Do not use dashes or lines
(for example, do not
enter “$ 1040-SS-” or “$ 1040-SSxx/100”).
Pay by credit card.
You can use your American Express® Card, Discover® Card, MasterCard® card, or Visa® card. To pay by credit card, call
toll-free or
visit the website of either service provider listed below and follow the instructions. A convenience fee will be charged by
the service provider based
on the amount you are paying. Fees may vary between the providers. You will be told what the fee is during the transaction
and you will have the
option to either continue or cancel the transaction. You can also find out what the fee will be by calling the provider's
toll-free automated customer
service number or visiting the provider's website shown below. If you pay by credit card before filing your return, enter
on page 1 of Form 1040-SS in
the upper left corner the confirmation number you were given at the end of the transaction and the amount you charged (not
including the convenience
fee).
Official Payments Corporation
1-800-2PAY-TAX
SM (1-800-272-9829)
1-877-754-4413 (Customer Service)
www.officialpayments.com
Link2Gov Corporation
1-888-PAY-1040
SM (1-888-729-1040)
1-888-658-5465 (Customer Service)
www.PAY1040.com
Pay by Electronic Federal Tax Payment System (EFTPS).
EFTPS is a free tax payment system designed with all taxpayers in mind. Online or by phone, you input your tax payment
information electronically
and you are done. EFTPS offers you convenience. Through EFTPS, you can schedule one-time or recurring payments for withdrawal
from your checking or
savings account up to 365 days in advance. You can also modify or cancel payments up to 2 business days before the scheduled
withdrawal date. To use
EFTPS, you must enroll. Enroll online at
www.eftps.gov or call 1-800-555-4477 to receive an enrollment form and instructions by mail.
TTY/TDD help is available by calling 1-800-733-4829.
If you want to allow a friend, family member, or any other person you choose to discuss your 2006 tax return with the IRS,
check the “Yes” box
in the Third Party Designee area on page 1 of Form 1040-SS. Also enter the designee's name, phone number, and any five numbers the designee
chooses as his or her personal identification number (PIN). But if you want to allow the paid preparer who signed your return
to discuss it with the
IRS, just enter “Preparer” in the space for the designee's name. You do not have to provide the other information requested.
If you check the “Yes” box, you, and your spouse if filing a joint return, are authorizing the IRS to call the designee to answer any
questions that may arise during the processing of your return. You are also authorizing the designee to:
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Give the IRS any information that is missing from your return,
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Call the IRS for information about the processing of your return or the status of your refund or payment(s),
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Receive copies of notices or transcripts related to your return, upon request, and
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Respond to certain IRS notices about math errors, offsets, and return preparation.
You are not authorizing the designee to receive any refund check, bind you to anything (including any additional tax liability),
or otherwise
represent you before the IRS. If you want to expand the designee's authorization, see Pub. 947, Practice Before the IRS and
Power of Attorney.
The authorization will automatically end no later than the due date (without regard to extensions) for filing your 2007 tax
return. This is April
15, 2008, for most people. If you wish to revoke the authorization before it ends, see Pub. 947.
Sign and date your return. It is not valid unless you sign it. If you are filing a joint return, your spouse must also sign.
If your spouse cannot
sign the return, see Pub. 501, Exemptions, Standard Deduction, and Filing Information.
Generally, anyone you pay to prepare your return must sign it in the space provided. The preparer must give you a copy of
the return for your
records. Someone who prepares your return but does not charge you should not sign your return.
If you have someone prepare your return, you are still responsible for the correctness of the return.
Providing your daytime phone number may help speed the processing of your return. If we have questions about items on your
return and you can
answer our questions over the phone, we may be able to continue processing your return without mailing you a letter. If you
are filing a joint return,
you may enter either your or your spouse's daytime phone number.
How To Get Forms and Publications
You can access the IRS website 24 hours a day, 7 days a week, at
www.irs.gov to download forms, instructions, and publications.
If you are a resident of the U.S. Virgin Islands or Puerto Rico, you can order forms and publications by calling 1-800-TAX-FORM
(1-800-829-3676).
You can order forms and publications by sending your order to:
National Distribution Center
P.O. Box 8903
Bloomington, IL 61702-8903
You can get forms and publications at the following walk-in sites.
Note.
The following addresses are subject to change.
Puerto Rico
U.S. Internal Revenue Service
7 Tabonuco Street, Suite 120
San Patricio Office Center
Guaynabo, PR 00966
USVI
V.I. Bureau of Internal Revenue
Federal Building, Room 216
5500 Veterans Drive
Charlotte Amalie, St. Thomas, VI 00802
V.I. Bureau of Internal Revenue
9601 Estate Thomas
Charlotte Amalie, St. Thomas, VI 00802
V.I. Bureau of Internal Revenue
4008 Estate Diamond
Christiansted, St. Croix, VI 00820
American Samoa
American Samoa Government
Tax Division, Suite 111
Pago Plaza
Pago Pago, AS 96799
American Samoa Government
Tax Office, EOB Building
Utulei, AS 96799
CNMI
Division of Revenue and Taxation
CNMI
Central Office, Civic Center
Saipan, MP 96950
To ensure proper credit to your social security account, enter your name and SSN, and your spouse's if filing a joint return,
exactly as shown on
your social security card. If you do not have an SSN, get Form SS-5, Application for a Social Security Card, from an SSA district
office.
You must pay SE tax if you had net earnings of $400 or more as a self-employed person. If you are in business for yourself
or you are a farmer, you
are self-employed.
You must also pay SE tax on your share of certain partnership income and your guaranteed payments. See Partnership Income or Loss
beginning on page 5.
If you had church employee income of $108.28 or more, you must pay SE tax on that income. Church employee income is wages
you received as an
employee (other than as a minister or member of a religious order) of a church or qualified church-controlled organization
that has a certificate in
effect electing exemption from employer social security and Medicare taxes.
If your only income subject to self-employment tax is church employee income, skip lines 1 through 4b in Part V. Enter -0-
on line 4c and go to
line 5a.
Ministers and Members of Religious Orders
In most cases, you must pay SE tax on salaries and other income for services you performed as a minister, a member of a religious
order who has not
taken a vow of poverty, or a Christian Science practitioner. But if you filed Form 4361, Application for Exemption From Self-Employment
Tax for Use by
Ministers, Members of Religious Orders and Christian Science Practitioners, and received IRS approval, you will be exempt
from paying SE tax on those
net earnings. If you had no other income subject to SE tax, you are not required to file Form 1040-SS. But if you had other
earnings of $400 or more
subject to SE tax, see Part V, line A.
If you must pay SE tax, include this income on Part IV, line 1. But do not report it on Part V, line 5a; it is not considered
church employee
income.
Also include on Part IV, line 1:
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The rental value of or allowance for a home furnished to you (including payments for utilities), and
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The value of meals and lodging provided to you, your spouse, and your dependents for your employer's convenience.
However, do not include on Part IV, line 1:
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Retirement benefits you received from a church plan after retirement, or
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The rental value of or allowance for a home furnished to you (including payments for utilities) after retirement.
If you were a duly ordained minister who was a church employee and you must pay SE tax, any unreimbursed business expenses
you incurred as a church
employee are allowed only as an itemized deduction on your income tax return, not as a deduction on Form 1040-SS. Report in
Part IV your income and
expenses from performing services as a minister. Enter the net amount on Part V, line 2.
For details, see Pub. 517, Social Security and Other Information for Members of the Clergy and Religious Workers.
If you have ever filed Form 2031 to elect social security coverage on your earnings as a minister, you cannot revoke that
election.
Members of Certain Religious Sects
If you have conscientious objections to social security insurance because of your membership in and belief in the teachings
of a religious sect
recognized as being in existence at all times since December 31, 1950, and which has provided a reasonable level of living
for its dependent members,
you can request exemption from SE tax by filing Form 4029, Application for Exemption From Social Security and Medicare Taxes
and Waiver of Benefits.
If you filed Form 4029 and have received IRS approval, do not file Form 1040-SS. See Pub. 517 for details.
Employees of Foreign Governments or International Organizations
You must pay SE tax on income you earned as a U.S. citizen or a resident of Puerto Rico employed by a foreign government (or,
in certain cases, by
a wholly owned instrumentality of a foreign government or an international organization under the International Organizations
Immunities Act) for
services performed in the United States, Puerto Rico, Guam, American Samoa, the USVI, or the CNMI. Report income from this
employment on Part IV, line
1. If you performed services elsewhere as an employee of a foreign government or an international organization, those earnings
are exempt from SE tax.
Commonwealth or Territory Residents Living Abroad
Generally, if you are a resident of Guam, American Samoa, the USVI, the CNMI, or Puerto Rico living abroad, you must pay SE
tax.
Exception.
The United States has social security agreements with many countries to eliminate dual taxes under two social security
systems. Under these
agreements, you must generally pay social security and Medicare taxes only to the country you live in.
The United States now has social security agreements with the following countries: Australia, Austria, Belgium, Canada,
Chile, Finland, France,
Germany, Greece, Ireland, Italy, Japan, Luxembourg, the Netherlands, Norway, Portugal, South Korea, Spain, Sweden, Switzerland,
and the United
Kingdom. Additional agreements are expected in the future.
If you have questions about international social security agreements, you can:
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Visit the Social Security Administration (SSA) website at
www.socialsecurity.gov/international,
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Call the SSA Office of International Programs at:
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410-965-0144 (not toll free) for questions on benefits under agreements, or
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410-965-3549 (not toll free) for questions on the coverage rules of the agreements, or
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Write to Social Security Administration, Office of International Programs, P.O. Box 17741, Baltimore, MD 21235-7741. (Do not
send Form
1040-SS to this address. Instead, see Where To File on page 1.)
Even if you do not have to pay self-employment tax because of a social security agreement, you may still have to file
a tax return with the
Internal Revenue Service.
Chapter 11 Bankruptcy Cases
While you are a debtor in a chapter 11 bankruptcy case, your net profit or loss from self-employment will be included on the
income tax return
(Form 1041) of the bankruptcy estate. However, you—not the bankruptcy estate—are responsible for paying self-employment tax
on your net
earnings from self-employment.
Enter on the dotted line to the left of line 3 of Form 1040-SS, Part V, “Chap. 11 bankruptcy income” and the amount of your net profit or
(loss). Combine that amount with the total of lines 1 and 2 (if any) and enter the result on line 3.
For other reporting requirements, see page 22 in the instructions for Form 1040.
If you were a farmer and had at least one other business or you had two or more nonfarm businesses, your net earnings from
self-employment are the
combined net earnings from all of your businesses. If you had a loss in one business, it reduces the income from another.
Complete and file only one
Form 1040-SS for any 1 year. Attach a separate Part III or Part IV for each trade or business, and include the net earnings
in Part V.
Joint returns.
If both you and your spouse have self-employment income from a farm or nonfarm business, each of you must complete
and file a separate Part III or
Part IV. Be sure to enter at the top of each Part III or Part IV the name and SSN of the spouse who owns the business. Each
of you must also complete
a separate Part V.
In most cases, if any of the income from a business (including farming) is community income, all of the income from that business
is considered
self-employment earnings of the spouse who carried on the trade or business. The facts in each situation will determine which
spouse carried on the
trade or business. If you and your spouse are partners in a partnership, see Partnership Income or Loss beginning on page 5.
If your tax year is a fiscal year, use the tax rate and earnings base that apply at the time the fiscal year begins. Do not
prorate the tax or
earnings base for a fiscal year that overlaps the date of a rate or earnings base change.
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