Help for Schedule SE Purpose If you are subject to self-employment tax, use Schedule SE to figure any tax due on net earnings from self-employment. You may also have to pay this tax on wages you were payed as an employee of an electing church or qualified church-controlled organization. The Social Security Administration uses the information from Schedule SE to figure your benefits under the social security program. This tax applies no matter how old you are. It applies even if you are already getting social security benefits. Get Pub. 533, Self-Employment Tax, for details. Note: Schedule SE has two sections: Section A, Short Schedule SE, and Section B, Long Schedule SE. Who MUST File Schedule SE You must file Schedule SE if a and b below apply to you: a. You were self-employed, and your net earnings from your business were $400 or more. (OR you had wages of $100 or more as an employee of an electing church or organization controlled by a church) AND b. You did not have wages (including tips), other than medicare qualified government wages of $48,000 or more that were subject to social security tax or railroad retirement tax. Who CAN File Schedule SE Even if you are not required to file Schedule SE, it may be to your benefit to file it and use the "optional method" in Section B. Note: Using the optional method may give you the benefits described below, but it will also increase your self-employment tax. 1.Social Security coverage - The optional method may give you credit toward your social security coverage even though you have a loss or low income from self-employment. 2.Earned Income Credit - Depending on your circumstances, using the optional method may qualify you to claim the earned income credit or give you a larger credit. This could happen if your SE earnings by not using the optional method are less than $1,600. Figure the earned income credit with and without using the optional method to see if the optional method will benefit you. 3.Child and Dependent card credit - The optional method may also help you if your SE eanrnings are less than $1,600 and you want to increase your net SE earnings to qualify to claim the child and dependent care credit. Who is Subject to Self-Employment Tax? Self-Employed Persons - You are subject to SE tax if you had net earnings from beibg self-employed. If you are in business for yourself, or you are a farmer, for example, you are self-employed. Your share of certain partnership income and guaranteed payments are subject to SE tax. Reat the instructions for Partnerships. Employees of Churches and Church Organizatons If you wer an employee of a church or qualified church-controlled organization that has in effect a certificate electing exemption from employer social security taxes, you may be subject to SE tax on you wages. This applies if the wages were $100 or more from any one church or church-controlled organization. See line B at the top of the Long SE. If you also have Medicare qualified government wages, you must use the worksheet for Line 6b of the Long Schedule SE. U.S. Citizens Employed by Foreign Governments or International Ogranizations You are subject to SE tax if you are a U.S. citizen employed: * in the United States, Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, or the Virgin Islands. * by a foreign government; and * in certain cases, by a wholly-owned instrumentality of a foreign government or by an international organization under the International Organizations Immunities Act. Report income from this employment on Schedule SE (Section A or B), line 2. If you are employed by a foreign government or an international organization in a country other than those listed, you are not subject to this tax. U.S. Citizens or Resident Aliens Living OUtside the United States If you are a self-employed U.S. citizen or resident alien living outside the United States, in most cases you are subject to the SE tax. You may not reduce your foreign earnings from self-emfployment by your foreign earned income exclusion. Coverage for Overseas Missionaries You may figure net earnings from self-employment as if you were in the United States if: * You are a U.S. citizen; and * You were a minister (but not a Christian Science Practioner) or a member of a religions order serving outside the United States; and * You were not exempt from SE tax because you filed Form 4361 Application of Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practioners. Get Pub. 517p, for more details. Who Is Not Subject to Self-Employment Tax? Members of the Clergy and Certain Religious Orders and Sects In most cases you are subject to SE tax on net earnings you get as a minister, a member of a religious order who has not taken a vow of poverty, or a Christian Science practioner. But you will not be subject to the tax on those net earnings if you filed Form 4361 and IRS approved you as exempt from the tax. In this case, if you have no other income subject to SE tax, write "Exempt-Form 4361" on Form 1040, line 48. However, if you have other earnings of $400 or more subject to SE tax, see line A at the top of the long SE. Note: If you have ever filed Form 2031 to elect social security coverage on your earnings as a minister, you cannot change that election now. If you have conscientious objections to social security insurance because of your belief in the teachings of a recognized religions sect of which you are a member, you are subject to the tax if you got IRS approval by filing Form 4029, Application for Exemption From Social Security Taxes and Waiver of Benefits. In this case, do not fiel Schedule SE. Instead, write "Exempt-Form 4029" on Form 1040, line 48. Note: D on file Form 4029 for wages you get form a church or church-controlled organization that has chosen to treat its employees as self-employed. General Information Fiscal Year Filers If your tax year is a fiscal year, you must use the tax rate and earnings base that apply at time the fiscal year begins. The tax or earnings base for a fiscal year that overlaps the date of a rate or change is not prorated. More Than One Business If you farmed and had at least on other business or you had two or more businesses, your net earnings from self-employment are the combined net earnings from all your businesses. If you had a loss in one busines, it reduces the income form another. Figure the combined SE tax on one Schdule SE. Joint Returns. Show the name of the spouse with SE income on Schedule SE. If both spouses have SE income, each must fiel a separate Schedule SE. If one spouse spouse qualifies to use the short SE, and the other has to use the long SE, both can use one Schedule SE. One spouse should complete the front and the other the back. Include the total profits or losses from all businesses on Form 1040, as appropriate. Then enter the combined SE tax on Form 1040, line 48. Community Income In most cases, if an of the income from a business. (including farming) is community income, all of the income from than business is SE earnings of the spouse who carried the business. The identity of the spouse carried on the business is determined by the facts in each case. If you and your spouse are partners in a partnership, see Partnerships.