Schedule SE

Description

You must file Schedule SE if you had net earnings from self-employment of $400 or more. Schedule SE is used to calculate your self-employment taxes. For 2005, Social Security tax of 12.4% is assessed on the first $90,000 of your self-employment earnings. Medicare tax of 2.9% is assessed on all of your self-employment earnings (there is no limit).

Self-employment income includes earnings reported on Schedule C and Schedule F from your trade or business, farming, and work as an independent contractor. Also, unless you are a limited partner in a partnership, you usually include business income or loss from a partnership in calculating your self-employment income (the amount of self-employment income should be shown on your K-1).

Examples of items that are NOT self-employment income are S corporation income, gambling winnings (unless you are a professional gambler), rental income from real estate (unless you are a real estate dealer), and jury duty pay.

Schedule SE Tax Tips

If your wages and self-employment income exceed $90,000, be sure to use Section B of Schedule SE to calculate your self-employment tax. If you use Section A, you will overpay your Social Security tax.

You can deduct 50% of your self-employment tax as an adjustment to gross income on Form 1040.

E-File Today
    ... Fast
       ... Easy
          ... Accurate