2021 Instructions for Schedule SE - IRS tax forms

1 Userid: CPMS chema: i1040xLeadpct: 100%Pt. size: 10 Draft Ok to PrintAH XSL/XMLF ileid: .. I1040 SCHSE/2018/A/XML/Cycle07/source(Init. & Date) _____Page 1 of 6 10:46 - 14-Nov-2018 The type and rule above prints on all proofs including departmental reproduction proofs. must be removed before of the TreasuryInternal Revenue Service2018 Instructions for Schedule SE ( form 1040) self -Employment TaxUse Schedule SE ( form 1040) to figure the tax due on net earnings from self -employ-ment. 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 and even if you are already getting social security or Medicare information. See Pub. 225 or Pub. references are to the Internal Revenue Code unless otherwise DevelopmentsFor the latest information about devel-opments related to Schedule SE ( form 1040) and its Instructions , such as legis-lation enacted after they were published, go to 's NewMaximum income subject to social se-curity tax.

2 For 2018, the maximum amount of self -employment income sub-ject to social security tax is $128, InstructionsWho must File Schedule SEYou must file Schedule SE if: The amount on line 4 of Short Schedule SE or line 4c of Long Sched-ule SE is $400 or more, or You had church employee income of $ or more. (Income from serv-ices you performed as a minister, mem-ber of a religious order, or Christian Sci-ence practitioner isn't church employee income.) See Employees of Churches and Church to filing Schedule SE. If you filed form 4029 or form 4361 and received IRS approval, you may not need to file Schedule SE. See Ministers, Members of Religious Orders, and Christian Science Practitioners and Members of Certain Religious Sects for information on how to report your self -employment if you had a loss or a small amount of income from self -employment, it may be to your benefit to file Schedule SE and use either "optional method" in Part II of Long Schedule SE (discussed later).

3 Who must Pay self -Employment (SE) TaxSelf-Employed PersonsYou must pay SE tax if you had net earnings of $400 or more as a self -em-ployed person. If you are in business (farm or nonfarm) for yourself, you are also must pay SE tax on your share of certain partnership income and your guaranteed payments. See Partner-ship Income or Loss, of Churches and Church OrganizationsIf you had church employee income of $ or more, you must pay SE tax. Church employee income is wages you received as an employee (other than as a minister, a member of a religious order, or a Christian Science practitioner) of a church or qualified church-controlled or-ganization that has a certificate in effect electing an exemption from employer social security and Medicare , Members of Religious Orders, and Christian Science PractitionersIn 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 hasn t taken a vow of poverty, or a Christian Science practitioner.

4 But if you filed form 4361 and received IRS approval, you will be exempt from paying SE tax on those net TIPearnings. If you had no other income subject to SE tax, enter Exempt form 4361 on Schedule 4 ( form 1040), line 57, or form 1040NR, line 55. How-ever, if you had other earnings of $400 or more subject to SE tax, see line A at the top of Long Schedule you have ever filed form 2031 to elect social security coverage on your earnings as a minister, you can t revoke that you must pay SE tax, include this income on either Short or Long Sched-ule SE, line 2. But don t report it on Long Schedule SE, line 5a; it isn t con-sidered church employee income. Also, include on line 2: The rental value of a home or an allowance for a home furnished to you (including payments for utilities), and The value of meals and lodging provided to you, your spouse, and your dependents for your employer's , don t include on line 2: Retirement benefits you received from a church plan after retirement, or The rental value of a home or an allowance for a home furnished to you (including payments for utilities) after you were a duly ordained minister who was an employee of a church and you must pay SE tax, the unreimbursed business expenses that you incurred as a church employee are not deductible as an itemized deduction for income tax purposes.

5 However, when figuring SE tax, subtract on line 2 the allowable ex-penses from your self -employment earn-ings and attach an you were a citizen or resident alien serving outside the United States as a minister or member of a religious order and you must pay SE tax, you CAUTION!SE-1 Nov 14, 2018 Cat. No. 24334 PPage 2 of 6 Fileid: .. I1040 SCHSE/2018/A/XML/Cycle07/source10:46 - 14-Nov-2018 The type and rule above prints on all proofs including departmental reproduction proofs. must be removed before t reduce your net earnings by the foreign earned income exclusion or the foreign housing exclusion or Pub. 517 for of Certain Religious SectsIf 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 pro-vided a reasonable level of living for its dependent members, you are exempt from SE tax if you received IRS appro-val by filing form 4029.

6 In this case, don t file Schedule SE. Instead, enter Exempt form 4029 on Schedule 4 ( form 1040), line 57, or form 1040NR, line 55. See Pub. 517 for citizens Employed by Foreign Governments or International OrganizationsYou must pay SE tax on income you earned as a citizen 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 Or-ganizations Immunities Act) for services performed in the United States, Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, or the Virgin Islands. Re-port income from this employment on either Short or Long Schedule SE, line 2. If you performed services else-where as an employee of a foreign gov-ernment or an international organization, those earnings are exempt from SE Dual citizens .

7 A person with dual citizenship gener-ally is considered to be a citizen for social security purposes. However, if you are a citizen and also a citizen of a country with which the United States has a bilateral social security agreement, other than Canada or Italy, your work for the government of that foreign country is always exempt from social security taxes. For further in-formation about these agreements, see the exception shown in the next citizens or Resident Aliens Living Outside the United StatesIf you are a self -employed citizen or resident alien living outside the Uni-ted States, in most cases you must pay SE tax. You can t reduce your foreign earnings from self -employment by your foreign earned income The United States has social security agreements with many countries to eliminate dual taxes under two social security systems.

8 Under these agree-ments, you generally must pay social se-curity and Medicare taxes to only the country in which you United States now has social se-curity agreements with the following countries: Australia, Austria, Belgium, Brazil, Canada, Chile, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Luxembourg, the Netherlands, Norway, Poland, Portugal, South Korea, Spain, Slovak Republic, Sweden, Switzerland, the United Kingdom, and you have questions about interna-tional social security agreements, or to see if any additional agreements have been entered into, you can visit the So-cial Security Administration's (SSA's) International Programs website at The website also provides contact information for ques-tions about benefits and the your self -employment income is exempt from SE tax, you should get a statement from the appropriate agency of the foreign country verifying that your self -employment income is subject to social security coverage in that coun-try.

9 If the foreign country won't issue the statement, contact the SSA Office of In-ternational Programs. Don t complete Schedule SE. Instead, attach a copy of the statement to form 1040 and enter Exempt, see attached statement on Schedule 4 ( form 1040), line AlienIf you are a self -employed nonresident alien living in the United States, you must pay SE tax if an international so-cial security agreement in effect deter-mines that you are covered under the social security system. See Excep-tion under citizens or Resident Ali-ens Living Outside the United States, earlier, for information about interna-tional social security agreements. If your self -employment income is subject to SE tax, complete Schedule SE and file it with your form 11 Bankruptcy CasesWhile you are a debtor in a chapter 11 bankruptcy case, your net profit or loss from self -employment (for example, from Schedule C or Schedule F) won't be included in your form 1040 income.

10 Instead, it will be included on the in-come tax return ( form 1041) of the bankruptcy estate. However, you (not the bankruptcy estate) are responsible for paying SE tax on your net earnings from on the dotted line to the left of Schedule SE, line 3, Chap. 11 bank-ruptcy income and the amount of your net profit or (loss). Combine that amount with the total of lines 1a, 1b, and 2 (if any) and enter the result on line other reporting requirements, see Chapter 11 Bankruptcy Cases in the In-structions for form Than One BusinessIf you had two or more businesses sub-ject to self -employment tax, your net earnings from self -employment are the combined net earnings from all of your businesses. If you had a loss in one busi-ness, it reduces the income from anoth-er. Figure the combined SE tax on one Schedule ReturnsShow the name of the spouse with self -employment income on Sched-ule SE.