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Amending 2012 Federal Tax Return

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Amending 2012 Federal Tax Return

Amending 2012 federal tax return 12. Amending 2012 federal tax return   Self-Employment Tax Table of Contents What's New for 2013 What's New for 2014 Introduction Topics - This chapter discusses: Useful Items - You may want to see: Why Pay Self-Employment Tax? How To Pay Self-Employment TaxReplacing a lost social security card. Amending 2012 federal tax return Name change. Amending 2012 federal tax return Penalty for underpayment of estimated tax. Amending 2012 federal tax return Who Must Pay Self-Employment Tax?Limited partner. Amending 2012 federal tax return Community property. Amending 2012 federal tax return Figuring Self-Employment EarningsLandlord Participation in Farming Methods for Figuring Net EarningsRegular Method Farm Optional Method Nonfarm Optional Method Using Both Optional Methods Reporting Self-Employment Tax What's New for 2013 Tax rates. Amending 2012 federal tax return  For tax years beginning in 2013, the social security part of the self-employment tax increases from 10. Amending 2012 federal tax return 4% to 12. Amending 2012 federal tax return 4%. Amending 2012 federal tax return The Medicare part of the tax remains at 2. Amending 2012 federal tax return 9%. Amending 2012 federal tax return As a result, the self-employment tax is increased from 13. Amending 2012 federal tax return 3% to 15. Amending 2012 federal tax return 3%. Amending 2012 federal tax return Additional Medicare Tax. Amending 2012 federal tax return . Amending 2012 federal tax return  For tax years beginning in 2013, a 0. Amending 2012 federal tax return 9% Additional Medicare Tax applies to your Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income above a threshold amount. Amending 2012 federal tax return Use Form 8959, Additional Medicare Tax, to figure this tax. Amending 2012 federal tax return For more information, see the Instructions for Form 8959. Amending 2012 federal tax return Maximum net earnings. Amending 2012 federal tax return  The maximum net self-employment earnings subject to the social security part (12. Amending 2012 federal tax return 4%) of the self-employment tax increased to $113,700 for 2013. Amending 2012 federal tax return There is no maximum limit on earnings subject to the Medicare part (2. Amending 2012 federal tax return 9%). Amending 2012 federal tax return What's New for 2014 Maximum net earnings. Amending 2012 federal tax return  The maximum net self-employment earnings subject to the social security part of the self-employment tax for 2014 will be discussed in the 2013 Publication 334. Amending 2012 federal tax return Introduction Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. Amending 2012 federal tax return It is similar to the social security and Medicare taxes withheld from the pay of most wage earners. Amending 2012 federal tax return You usually have to pay SE tax if you are self-employed. Amending 2012 federal tax return You are usually self-employed if you operate your own farm on land you either own or rent. Amending 2012 federal tax return You have to figure SE tax on Schedule SE (Form 1040). Amending 2012 federal tax return Farmers who have employees may have to pay the employer's share of social security and Medicare taxes, as well. Amending 2012 federal tax return See chapter 13 for information on employment taxes. Amending 2012 federal tax return Self-employment tax rate. Amending 2012 federal tax return   For tax years beginning in 2013, the self-employment tax rate is 15. Amending 2012 federal tax return 3%. Amending 2012 federal tax return The rate consists of two parts: 12. Amending 2012 federal tax return 4% for social security (old-age, survivors, and disability insurance) and 2. Amending 2012 federal tax return 9% for Medicare (hospital insurance). Amending 2012 federal tax return Topics - This chapter discusses: Why pay self-employment tax How to pay self-employment tax Who must pay self-employment tax Figuring self-employment earnings Landlord participation in farming Methods for figuring net earnings Reporting self-employment tax Useful Items - You may want to see: Publication 541 Partnerships Form (and Instructions) 1040 U. Amending 2012 federal tax return S. Amending 2012 federal tax return Individual Income Tax Return Sch F (Form 1040) Profit or Loss From Farming Sch SE (Form 1040) Self-Employment Tax 1065 U. Amending 2012 federal tax return S. Amending 2012 federal tax return Return of Partnership Income Sch K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. Amending 2012 federal tax return See chapter 16 for information about getting publications and forms. Amending 2012 federal tax return Why Pay Self-Employment Tax? Social security benefits are available to self-employed persons just as they are to wage earners. Amending 2012 federal tax return Your payments of SE tax contribute to your coverage under the social security system. Amending 2012 federal tax return Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. Amending 2012 federal tax return How to become insured under social security. Amending 2012 federal tax return   You must be insured under the social security system before you begin receiving social security benefits. Amending 2012 federal tax return You are insured if you have the required number of credits (also called quarters of coverage). Amending 2012 federal tax return Earning credits in 2013. Amending 2012 federal tax return   You can earn a maximum of four credits per year. Amending 2012 federal tax return For 2013, you earn one credit for each $1,160 of combined wages and self-employment earnings subject to social security tax. Amending 2012 federal tax return You need $4,640 ($1,160 × 4) of combined wages and self-employment earnings subject to social security tax to earn four credits in 2013. Amending 2012 federal tax return It does not matter whether the income is earned in 1 quarter or is spread over 2 or more quarters. Amending 2012 federal tax return For an explanation of the number of credits you must have to be insured and the benefits available to you and your family under the social security program, consult your nearest Social Security Administration (SSA) office or visit the SSA website at www. Amending 2012 federal tax return socialsecurity. Amending 2012 federal tax return gov. Amending 2012 federal tax return Making false statements to get or to increase social security benefits may subject you to penalties. Amending 2012 federal tax return The Social Security Administration (SSA) time limit for posting self-employment earnings. Amending 2012 federal tax return   Generally, the SSA will give you credit only for self-employment earnings reported on a tax return filed within 3 years, 3 months, and 15 days after the tax year you earned the income. Amending 2012 federal tax return    If you file your tax return or report a change in your self-employment earnings after the SSA time limit for posting self-employment earnings, the SSA may change its records, but only to remove or reduce the amount. Amending 2012 federal tax return The SSA will not change its records to increase your self-employment earnings after the SSA time limit listed above. Amending 2012 federal tax return How To Pay Self-Employment Tax To pay SE tax, you must have a social security number (SSN) or an individual taxpayer identification number (ITIN). Amending 2012 federal tax return This section explains how to: Obtain an SSN or ITIN, and Pay your SE tax using estimated tax. Amending 2012 federal tax return An ITIN does not entitle you to social security benefits. Amending 2012 federal tax return Obtaining an ITIN does not change your immigration or employment status under U. Amending 2012 federal tax return S. Amending 2012 federal tax return law. Amending 2012 federal tax return Obtaining a social security number. Amending 2012 federal tax return   If you have never had an SSN, apply for one using Form SS-5, Application for a Social Security Card. Amending 2012 federal tax return The application is also available in Spanish. Amending 2012 federal tax return You can get this form at any Social Security office or by calling 1-800-772-1213. Amending 2012 federal tax return    You can also download Form SS-5 from the Social Security Administration website at  www. Amending 2012 federal tax return socialsecurity. Amending 2012 federal tax return gov. Amending 2012 federal tax return   If you have a social security number from the time you were an employee, you must use that number. Amending 2012 federal tax return Do not apply for a new one. Amending 2012 federal tax return Replacing a lost social security card. Amending 2012 federal tax return   If you have a number but lost your card, file Form SS-5. Amending 2012 federal tax return You will get a new card showing your original number, not a new number. Amending 2012 federal tax return Name change. Amending 2012 federal tax return   If your name has changed since you received your social security card, complete Form SS-5 to report a name change. Amending 2012 federal tax return Obtaining an individual taxpayer identification number. Amending 2012 federal tax return   The IRS will issue you an ITIN, for tax use only, if you are a nonresident or resident alien and you do not have, and are not eligible to get, an SSN. Amending 2012 federal tax return To apply for an ITIN, file Form W-7, Application for IRS Individual Taxpayer Identification Number. Amending 2012 federal tax return You can get this form by calling 1-800-829-3676. Amending 2012 federal tax return For more information on ITINs, see Publication 1915, Understanding Your IRS Individual Taxpayer Identification Number. Amending 2012 federal tax return Form W-7 and Publication 1915 are also available in Spanish. Amending 2012 federal tax return    You can also download Form W-7 from the IRS website at IRS. Amending 2012 federal tax return gov. Amending 2012 federal tax return Paying estimated tax. Amending 2012 federal tax return   Estimated tax is the method used to pay tax (including SE tax) on income not subject to withholding. Amending 2012 federal tax return You generally have to make estimated tax payments if you expect to owe tax, including SE tax, of $1,000 or more when you file your return. Amending 2012 federal tax return Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay the tax. Amending 2012 federal tax return   However, if at least two-thirds of your gross income for 2013 or 2014 was from farming and you file your 2014 Form 1040 and pay all the tax due by March 2, 2015, you do not have to pay any estimated tax. Amending 2012 federal tax return For more information about estimated tax for farmers, see chapter 15. Amending 2012 federal tax return Penalty for underpayment of estimated tax. Amending 2012 federal tax return   You may have to pay a penalty if you do not pay enough estimated tax by its due date. Amending 2012 federal tax return Who Must Pay Self-Employment Tax? You must pay SE tax and file Schedule SE (Form 1040) if your net earnings from self-employment were $400 or more. Amending 2012 federal tax return The SE tax rules apply no matter how old you are and even if you are already receiving social security or Medicare benefits. Amending 2012 federal tax return Aliens. Amending 2012 federal tax return   Generally, resident aliens must pay self-employment tax under the same rules that apply to U. Amending 2012 federal tax return S. Amending 2012 federal tax return citizens. Amending 2012 federal tax return Nonresident aliens are not subject to self-employment tax. Amending 2012 federal tax return However, residents of the Virgin Islands, Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, or American Samoa are subject to self-employment tax, as they are considered U. Amending 2012 federal tax return S. Amending 2012 federal tax return residents for self-employment tax purposes. Amending 2012 federal tax return For more information on aliens, see Publication 519, U. Amending 2012 federal tax return S. Amending 2012 federal tax return Tax Guide for Aliens. Amending 2012 federal tax return Are you self-employed?   You are self-employed if you carry on a trade or business (such as running a farm) as a sole proprietor, an independent contractor, a member of a partnership, or are otherwise in business for yourself. Amending 2012 federal tax return A trade or business is generally an activity carried on for a livelihood or in good faith to make a profit. Amending 2012 federal tax return Share farmer. Amending 2012 federal tax return   You are a self-employed farmer under an income-sharing arrangement if both the following apply. Amending 2012 federal tax return You produce a crop or raise livestock on land belonging to another person. Amending 2012 federal tax return Your share of the crop or livestock, or the proceeds from their sale, depends on the amount produced. Amending 2012 federal tax return Your net farm profit or loss from the income-sharing arrangement is reported on Schedule F (Form 1040) and included in your self-employment earnings. Amending 2012 federal tax return   If you produce a crop or livestock on land belonging to another person and are to receive a specified rate of pay, a fixed sum of money, or a fixed quantity of the crop or livestock, and not a share of the crop or livestock or their proceeds, you may be either self-employed or an employee of the landowner. Amending 2012 federal tax return This will depend on whether the landowner has the right to direct or control your performance of services. Amending 2012 federal tax return Example. Amending 2012 federal tax return A share farmer produces a crop on land owned by another person on a 50-50 crop-share basis. Amending 2012 federal tax return Under the terms of their agreement, the share farmer furnishes the labor and half the cost of seed and fertilizer. Amending 2012 federal tax return The landowner furnishes the machinery and equipment used to produce and harvest the crop, and half the cost of seed and fertilizer. Amending 2012 federal tax return The share farmer is provided a house in which to live. Amending 2012 federal tax return The landowner and the share farmer decide on a cropping plan. Amending 2012 federal tax return The share farmer is a self-employed farmer for purposes of the agreement to produce the crops, and the share farmer's part of the profit or loss from the crops is reported on Schedule F (Form 1040) and included in self-employment earnings. Amending 2012 federal tax return The tax treatment of the landowner is discussed later under Landlord Participation in Farming. Amending 2012 federal tax return Contract farming. Amending 2012 federal tax return   Under typical contract farming arrangements, the grower receives a fixed payment per unit of crops or finished livestock delivered to the processor or packing company. Amending 2012 federal tax return Since the grower typically furnishes labor and bears some production risk, the payments are reported on Schedule F and are therefore subject to self-employment tax. Amending 2012 federal tax return 4-H Club or FFA project. Amending 2012 federal tax return   If an individual participates in a 4-H Club or Future Farmers of America (FFA) project, any net income received from sales or prizes related to the project may be subject to income tax. Amending 2012 federal tax return Report the net income as “Other income” on line 21 of Form 1040. Amending 2012 federal tax return If necessary, attach a statement showing the gross income and expenses. Amending 2012 federal tax return The net income may not be subject to SE tax if the project is primarily for educational purposes and not for profit, and is completed by the individual under the rules and economic restrictions of the sponsoring 4-H or FFA organization. Amending 2012 federal tax return Such a project is generally not considered a trade or business. Amending 2012 federal tax return Partners in a partnership. Amending 2012 federal tax return   Generally, you are self-employed if you are a member of a partnership that carries on a trade or business. Amending 2012 federal tax return Limited partner. Amending 2012 federal tax return   If you are a limited partner, your partnership income is generally not subject to SE tax. Amending 2012 federal tax return However, guaranteed payments you receive for services you perform for the partnership are subject to SE tax and should be reported to you in box 14 of your Schedule K-1 (Form 1065). Amending 2012 federal tax return Business Owned and Operated by Spouses. Amending 2012 federal tax return   If you and your spouse jointly own and operate a farm as an unincorporated business and share in the profits and losses, you are partners in a partnership whether or not you have a formal partnership agreement. Amending 2012 federal tax return You must file Form 1065, instead of Schedule F, unless you make a joint election to be treated as a qualified joint venture. Amending 2012 federal tax return Making this election will allow you to avoid the complexity of Form 1065 but still give each spouse credit for social security earnings on which retirement benefits are based. Amending 2012 federal tax return Qualified joint venture. Amending 2012 federal tax return   If you and your spouse each materially participate as the only members of a jointly owned and operated farm, and you file a joint tax return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership for the tax year. Amending 2012 federal tax return For an explanation of “material participation,” see the instructions for Schedule C, line G, and the instructions for Schedule F, line E. Amending 2012 federal tax return   To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. Amending 2012 federal tax return Each of you must file a separate Schedule F and a separate Schedule SE. Amending 2012 federal tax return For more information, see Qualified Joint Venture in the Instructions for Schedule SE (Form 1040). Amending 2012 federal tax return Spouse employee. Amending 2012 federal tax return   If your spouse is your employee, not your partner, you must withhold and pay social security and Medicare taxes for him or her. Amending 2012 federal tax return For more information about employment taxes, see chapter 13. Amending 2012 federal tax return Community property. Amending 2012 federal tax return   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 property, treat your share as your self-employment earnings. Amending 2012 federal tax return Do not treat any of your share as self-employment earnings of your spouse. Amending 2012 federal tax return Figuring Self-Employment Earnings Farmer. Amending 2012 federal tax return   If you are self-employed as a farmer, use Schedule F (Form 1040) to figure your self-employment earnings. Amending 2012 federal tax return Partnership income or loss. Amending 2012 federal tax return   If you are a member of a partnership that carries on a trade or business, the partnership should report your self-employment earnings in box 14, code A, of your Schedule K-1 (Form 1065). Amending 2012 federal tax return Box 14 of Schedule K-1 may also provide amounts for gross farming or fishing income (code B) and gross nonfarm income (code C). Amending 2012 federal tax return Use these amounts if you use the farm or nonfarm optional method to figure net earnings from self-employment (see Methods for Figuring Net Earnings , later). Amending 2012 federal tax return   If you are a general partner, you may need to reduce these reported earnings by amounts you claim as a section 179 deduction, unreimbursed partnership expenses, or depletion on oil and gas properties. Amending 2012 federal tax return   If the amount reported is a loss, include only the deductible amount when you figure your total self-employment earnings. Amending 2012 federal tax return   For more information, see the Partner's Instructions for Schedule K-1 (Form 1065). Amending 2012 federal tax return   For general information on partnerships, see Publication 541. Amending 2012 federal tax return More than one business. Amending 2012 federal tax return   If you have self-employment earnings from more than one trade, business, or profession, you generally must combine the net profit or loss from each to determine your total self-employment earnings. Amending 2012 federal tax return A loss from one business reduces your profit from another business. Amending 2012 federal tax return However, do not combine earnings from farm and nonfarm businesses if you are using one of the optional methods (discussed later) to figure net earnings. Amending 2012 federal tax return Community property. Amending 2012 federal tax return   If any of the income from a farm or business, other than a partnership, is community property under state law, it is included in the self-employment earnings of the spouse carrying on the trade or business. Amending 2012 federal tax return Lost income payments. Amending 2012 federal tax return   Lost income payments received from insurance or other sources for reducing or stopping farming activities are included in self-employment earnings. Amending 2012 federal tax return These include USDA payments to compensate for lost income resulting from reductions in tobacco quotas and allotments. Amending 2012 federal tax return Even if you are not farming when you receive the payment, it is included in self-employment earnings if it relates to your farm business (even though it is temporarily inactive). Amending 2012 federal tax return A connection exists if it is clear the payment would not have been made but for your conduct of your farm business. Amending 2012 federal tax return Gain or loss. Amending 2012 federal tax return   A gain or loss from the disposition of property that is neither stock in trade nor held primarily for sale to customers is not included in self-employment earnings. Amending 2012 federal tax return It does not matter whether the disposition is a sale, exchange, or involuntary conversion. Amending 2012 federal tax return For example, gains or losses from the disposition of the following types of property are not included in self-employment earnings. Amending 2012 federal tax return Investment property. Amending 2012 federal tax return Depreciable property or other fixed assets used in your trade or business. Amending 2012 federal tax return Livestock held for draft, breeding, sport, or dairy purposes, and not held primarily for sale, regardless of how long the livestock was held, or whether it was raised or purchased. Amending 2012 federal tax return Unharvested standing crops sold with land held more than 1 year. Amending 2012 federal tax return Timber, coal, or iron ore held for more than 1 year if an economic interest was retained, such as a right to receive coal royalties. Amending 2012 federal tax return   A gain or loss from the cutting of timber is not included in self-employment earnings if the cutting is treated as a sale or exchange. Amending 2012 federal tax return For more information on electing to treat the cutting of timber as a sale or exchange, see Timber in chapter 8. Amending 2012 federal tax return Wages and salaries. Amending 2012 federal tax return   Wages and salaries received for services performed as an employee and covered by social security or railroad retirement are not included in self-employment earnings. Amending 2012 federal tax return   Wages paid in kind to you for agricultural labor, such as commodity wages, are not included in self-employment earnings. Amending 2012 federal tax return Retired partner. Amending 2012 federal tax return   Retirement income received by a partner from his or her partnership under a written plan is not included in self-employment earnings if all the following apply. Amending 2012 federal tax return The retired partner performs no services for the partnership during the year. Amending 2012 federal tax return The retired partner is owed only the retirement payments. Amending 2012 federal tax return The retired partner's share (if any) of the partnership capital was fully paid to the retired partner. Amending 2012 federal tax return The payments to the retired partner are lifelong periodic payments. Amending 2012 federal tax return Conservation Reserve Program (CRP) payments. Amending 2012 federal tax return   Under the Conservation Reserve Program (CRP), if you own or operate highly erodible or other specified cropland, you may enter into a longterm contract with the USDA, agreeing to convert to a less intensive use of that cropland. Amending 2012 federal tax return You must include the annual rental payments and any onetime incentive payment you receive under the program on Schedule F, lines 4a and 4b. Amending 2012 federal tax return Cost share payments you receive may qualify for the costsharing exclusion. Amending 2012 federal tax return See Cost-Sharing Exclusion (Improvements), above. Amending 2012 federal tax return CRP payments are reported to you on Form 1099G. Amending 2012 federal tax return Individuals who are receiving Social Security retirement or disability benefits may exclude CRP payments when calculating self-employment tax. Amending 2012 federal tax return See the instructions for Schedule SE (Form 1040). Amending 2012 federal tax return Self-employed health insurance deduction. Amending 2012 federal tax return   You cannot deduct the self-employed health insurance deduction you report on Form 1040, line 29, from self-employment earnings on Schedule SE (Form 1040). Amending 2012 federal tax return Landlord Participation in Farming As a general rule, income and deductions from rentals and from personal property leased with real estate are not included in determining self-employment earnings. Amending 2012 federal tax return However, income and deductions from farm rentals, including government commodity program payments received by a landowner who rents land, are included if the rental arrangement provides that the landowner will, and does, materially participate in the production or management of production of the farm products on the land. Amending 2012 federal tax return Crop shares. Amending 2012 federal tax return   Rent paid in the form of crop shares is included in self-employment earnings for the year you sell, exchange, give away, or use the crop shares if you meet one of the four material participation tests (discussed next) at the time the crop shares are produced. Amending 2012 federal tax return Feeding such crop shares to livestock is considered using them. Amending 2012 federal tax return Your gross income for figuring your self-employment earnings includes the fair market value of the crop shares when they are used as feed. Amending 2012 federal tax return Material participation for landlords. Amending 2012 federal tax return   You materially participate if you have an arrangement with your tenant for your participation and you meet one or more of the following tests. Amending 2012 federal tax return You do at least three of the following. Amending 2012 federal tax return Pay, using cash or credit, at least half the direct costs of producing the crop or livestock. Amending 2012 federal tax return Furnish at least half the tools, equipment, and livestock used in the production activities. Amending 2012 federal tax return Advise or consult with your tenant. Amending 2012 federal tax return Inspect the production activities periodically. Amending 2012 federal tax return You regularly and frequently make, or take an important part in making, management decisions substantially contributing to or affecting the success of the enterprise. Amending 2012 federal tax return You work 100 hours or more spread over a period of 5 weeks or more in activities connected with agricultural production. Amending 2012 federal tax return You do things that, considered in their totality, show you are materially and significantly involved in the production of the farm commodities. Amending 2012 federal tax return These tests may be used as general guides for determining whether you are a material participant. Amending 2012 federal tax return Example. Amending 2012 federal tax return Drew Houston agrees to produce a crop on J. Amending 2012 federal tax return Clarke's cotton farm, with each receiving half the proceeds. Amending 2012 federal tax return Clarke advises Houston when to plant, spray, and pick the cotton. Amending 2012 federal tax return During the growing season, Clarke inspects the crop every few days to determine whether Houston is properly taking care of the crop. Amending 2012 federal tax return Houston furnishes all labor needed to grow and harvest the crop. Amending 2012 federal tax return The management decisions made by Clarke in connection with the care of the cotton crop and his regular inspection of the crop establish that he participates to a material degree in the cotton production operations. Amending 2012 federal tax return The income Clarke receives from his cotton farm is included in his self-employment earnings. Amending 2012 federal tax return Methods for Figuring Net Earnings There are three ways to figure your net earnings from self-employment. Amending 2012 federal tax return The regular method. Amending 2012 federal tax return The farm optional method. Amending 2012 federal tax return The nonfarm optional method. Amending 2012 federal tax return You must use the regular method unless you are eligible to use one or both of the optional methods. Amending 2012 federal tax return See Figure 12-1 , shown later. Amending 2012 federal tax return Figure 12-1. Amending 2012 federal tax return Can I Use the Optional Methods? Please click here for the text description of the image. Amending 2012 federal tax return Figure 12–1. Amending 2012 federal tax return Can I Use the Optional Methods? Why use an optional method?   You may want to use the optional methods (discussed later) when you have a loss or a small net profit and any one of the following applies. Amending 2012 federal tax return You want to receive credit for social security benefit coverage. Amending 2012 federal tax return You incurred child or dependent care expenses for which you could claim a credit. Amending 2012 federal tax return (An optional method may increase your earned income, which could increase your credit. Amending 2012 federal tax return ) You are entitled to the earned income credit. Amending 2012 federal tax return (An optional method may increase your earned income, which could increase your credit. Amending 2012 federal tax return ) You are entitled to the additional child tax credit. Amending 2012 federal tax return (An optional method may increase your earned income, which could increase your credit. Amending 2012 federal tax return ) Effects of using an optional method. Amending 2012 federal tax return   Using an optional method could increase your SE tax. Amending 2012 federal tax return Paying more SE tax may result in you getting higher social security disability or retirement benefits. Amending 2012 federal tax return   If you use either or both optional methods, you must figure and pay the SE tax due under these methods even if you would have had a smaller SE tax or no SE tax using the regular method. Amending 2012 federal tax return   The optional methods may be used only to figure your SE tax. Amending 2012 federal tax return To figure your income tax, include your actual self-employment earnings in gross income, regardless of which method you use to determine SE tax. Amending 2012 federal tax return Regular Method Multiply your total self-employment earnings by 92. Amending 2012 federal tax return 35% (. Amending 2012 federal tax return 9235) to get your net earnings under the regular method. Amending 2012 federal tax return See Short Schedule SE, line 4, or Long Schedule SE, line 4a. Amending 2012 federal tax return Net earnings figured using the regular method are also called “actual net earnings. Amending 2012 federal tax return ” Farm Optional Method Use the farm optional method only for self-employment earnings from a farming business. Amending 2012 federal tax return You can use this method if you meet either of the following tests. Amending 2012 federal tax return Your gross farm income is $6,960 or less. Amending 2012 federal tax return Your net farm profits are less than $5,024. Amending 2012 federal tax return Gross farm income. Amending 2012 federal tax return   Your gross farm income is the total of the amounts from: Schedule F (Form 1040), line 9, and Schedule K-1 (Form 1065), box 14, code B (from farm partnerships). Amending 2012 federal tax return Net farm profits. Amending 2012 federal tax return   Net farm profits generally are the total of the amounts from: Schedule F (Form 1040), line 34, and Schedule K-1 (Form 1065), box 14, code A (from farm partnerships). Amending 2012 federal tax return However, you may need to adjust the amount reported on Schedule K-1 if you are a general partner or if it is a loss. Amending 2012 federal tax return For more information, see Partnership income or loss , earlier. Amending 2012 federal tax return Figuring farm net earnings. Amending 2012 federal tax return   If you meet either of the two tests explained above, use Table 12-1. Amending 2012 federal tax return Figuring Farm Net Earnings , to figure your net earnings from self-employment under the farm optional method. Amending 2012 federal tax return Table 12-1. Amending 2012 federal tax return Figuring Farm Net Earnings IF your gross farm income  is. Amending 2012 federal tax return . Amending 2012 federal tax return . Amending 2012 federal tax return THEN your net earnings are equal to. Amending 2012 federal tax return . Amending 2012 federal tax return . Amending 2012 federal tax return $6,960 or less Two-thirds of your gross farm income. Amending 2012 federal tax return More than $6,960 $4,640 Optional method can reduce or eliminate SE tax. Amending 2012 federal tax return   If your gross farm income is $6,960 or less and your farm net earnings figured under the farm optional method are less than your actual net earnings, you can use the farm optional method to reduce or eliminate your SE tax. Amending 2012 federal tax return Your actual net earnings are your net earnings figured using the regular method, explained earlier. Amending 2012 federal tax return Example. Amending 2012 federal tax return Your gross farm income is $540 and your net farm profit is $460. Amending 2012 federal tax return Consequently, your net earnings figured under the farm optional method are $360 (2/3 of $540) and your actual net earnings are $425 (92. Amending 2012 federal tax return 35% of $460). Amending 2012 federal tax return You owe no SE tax if you use the optional method because your net earnings under the farm optional method are less than $400. Amending 2012 federal tax return Nonfarm Optional Method This is an optional method available for determining net earnings from nonfarm self-employment, much like the farm optional method. Amending 2012 federal tax return If you are also engaged in a nonfarm business, you may be able to use this method to figure your nonfarm net earnings. Amending 2012 federal tax return You can use this method even if you do not use the farm optional method for determining your farm net earnings and even if you have a net loss from your nonfarm business. Amending 2012 federal tax return For more information about the nonfarm optional method, see Publication 334. Amending 2012 federal tax return You cannot combine farm and nonfarm self-employment earnings to figure your net earnings under either of the optional methods. Amending 2012 federal tax return Using Both Optional Methods If you use both optional methods, you must add the net earnings figured under each method to arrive at your total net earnings from self-employment. Amending 2012 federal tax return You can report less than your total actual farm and nonfarm net earnings but not less than actual nonfarm net earnings. Amending 2012 federal tax return If you use both optional methods, you can report no more than $4,640 as your combined net earnings from self-employment. Amending 2012 federal tax return Reporting Self-Employment Tax Use Schedule SE (Form 1040) to figure and report your SE tax. Amending 2012 federal tax return Then, enter the SE tax on line 56 of Form 1040 and attach Schedule SE to Form 1040. Amending 2012 federal tax return Most taxpayers can use Section A–Short Schedule SE to figure their SE tax. Amending 2012 federal tax return However, certain taxpayers must use Section B–Long Schedule SE. Amending 2012 federal tax return Use the chart on page 1 of Schedule SE to find out which one to use. Amending 2012 federal tax return 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. Amending 2012 federal tax return Deduction for employer-equivalent portion of self-employment tax. Amending 2012 federal tax return   You can deduct the employer-equivalent portion of your SE tax in figuring your adjusted gross income. Amending 2012 federal tax return This deduction only affects your income tax. Amending 2012 federal tax return It does not affect either your net earnings from self-employment or your SE tax. Amending 2012 federal tax return   To deduct the tax, enter on Form 1040, line 27, the amount shown on Section A, Line 6, or Section B, line 13, Deduction for employer-equivalent portion of self-employment tax, of the Schedule SE. Amending 2012 federal tax return Joint return. Amending 2012 federal tax return   Even if you file a joint return, you cannot file a joint Schedule SE. Amending 2012 federal tax return This is true whether one spouse or both spouses have self-employment earnings. Amending 2012 federal tax return Your spouse is not considered self-employed just because you are. Amending 2012 federal tax return If both of you have self-employment earnings, each of you must complete a separate Schedule SE. Amending 2012 federal tax return 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. Amending 2012 federal tax return Attach both schedules to the joint return. Amending 2012 federal tax return If you and your spouse operate a business as a partnership, see Business Owned and Operated by Spouses and Qualified joint venture , earlier, under Who Must Pay Self-Employment Tax . Amending 2012 federal tax return Prev  Up  Next   Home   More Online Publications
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Letter 2761C Frequently Asked Questions (FAQs)

What is the letter telling me?

The letter is requesting your combat zone service dates to ensure that we provide you with the special provisions and protection of the combat zone deferment. It may also request copies of military orders or other documentation to support your time served in a combat zone. If you are a civilian working in support of the Armed Forces, it may ask for a Letter of Authorization or a letter from your employer.

What do I have to do?

Provide us with documentation, if requested, and your entry and exit dates in and out of the Combat Zone based on your military orders.

How much time do I have?

The letter will provide you when and where the information needs to be returned to.

What happens if I don't take any action?

If you do not provide us these dates, you will not receive the penalty and interest reductions that servicemen and women and qualified civilians are entitled to under Internal Revenue Code (IRC) 7508 or the Soldiers and Sailors Relief Act.

Who should I contact?

If you have any questions about this letter, call us at the number printed in the letter. The person who answers the phone will assist you.

What if I don't agree or have already taken corrective action?

If you do not agree with this letter, call us immediately at the number included. We will do our best to help you. If you have called us about this matter before, but we did not correct the problem, you may want to contact the Office of the Taxpayer Advocate.

Page Last Reviewed or Updated: 30-Jan-2014

The Amending 2012 Federal Tax Return

Amending 2012 federal tax return Publication 584 - Additional Material Table of Contents This image is too large to be displayed in the current screen. Amending 2012 federal tax return Please click the link to view the image. Amending 2012 federal tax return Entrance Hall This image is too large to be displayed in the current screen. Amending 2012 federal tax return Please click the link to view the image. Amending 2012 federal tax return Living Room This image is too large to be displayed in the current screen. Amending 2012 federal tax return Please click the link to view the image. Amending 2012 federal tax return Dining Room This image is too large to be displayed in the current screen. Amending 2012 federal tax return Please click the link to view the image. Amending 2012 federal tax return Kitchen This image is too large to be displayed in the current screen. Amending 2012 federal tax return Please click the link to view the image. Amending 2012 federal tax return Den This image is too large to be displayed in the current screen. Amending 2012 federal tax return Please click the link to view the image. Amending 2012 federal tax return Bedrooms This image is too large to be displayed in the current screen. Amending 2012 federal tax return Please click the link to view the image. Amending 2012 federal tax return Bathrooms This image is too large to be displayed in the current screen. Amending 2012 federal tax return Please click the link to view the image. Amending 2012 federal tax return Recreation Room This image is too large to be displayed in the current screen. Amending 2012 federal tax return Please click the link to view the image. Amending 2012 federal tax return Laundry and Basement This image is too large to be displayed in the current screen. Amending 2012 federal tax return Please click the link to view the image. Amending 2012 federal tax return Garage This image is too large to be displayed in the current screen. Amending 2012 federal tax return Please click the link to view the image. Amending 2012 federal tax return Sporting Equipment This image is too large to be displayed in the current screen. Amending 2012 federal tax return Please click the link to view the image. Amending 2012 federal tax return Men's Clothing This image is too large to be displayed in the current screen. Amending 2012 federal tax return Please click the link to view the image. Amending 2012 federal tax return Women's Clothing This image is too large to be displayed in the current screen. Amending 2012 federal tax return Please click the link to view the image. Amending 2012 federal tax return Children's Clothing This image is too large to be displayed in the current screen. Amending 2012 federal tax return Please click the link to view the image. Amending 2012 federal tax return Jewelry This image is too large to be displayed in the current screen. Amending 2012 federal tax return Please click the link to view the image. Amending 2012 federal tax return Electrical Appliances This image is too large to be displayed in the current screen. Amending 2012 federal tax return Please click the link to view the image. Amending 2012 federal tax return Linens This image is too large to be displayed in the current screen. Amending 2012 federal tax return Please click the link to view the image. Amending 2012 federal tax return Miscellaneous This image is too large to be displayed in the current screen. Amending 2012 federal tax return Please click the link to view the image. Amending 2012 federal tax return Motor Vehicles Schedule 20. Amending 2012 federal tax return Home (Excluding Contents) Note. Amending 2012 federal tax return If you used the entire property as your home, fill out only column (a). Amending 2012 federal tax return If you used part of the property as your home and part of it for business or to produce rental income, you must allocate the entries on lines 2-9 between the personal part (column (a)) and the business/rental part (column (b)). Amending 2012 federal tax return 1. Amending 2012 federal tax return Description of property (Show location and date acquired. Amending 2012 federal tax return )     (a)  Personal Part (b)  Business/Rental Part 2. Amending 2012 federal tax return Cost or other (adjusted) basis of property (from Worksheet A)     3. Amending 2012 federal tax return Insurance or other reimbursement Note. Amending 2012 federal tax return If line 2 is more than line 3, skip line 4. Amending 2012 federal tax return If line 3 is more than line 2, you exclude gain, and the gain is more than you can exclude, see the instructions for line 3 in the Instructions for Form 4684 for the amount to enter. Amending 2012 federal tax return     4. Amending 2012 federal tax return Gain from casualty. Amending 2012 federal tax return If line 3 is more than line 2, enter the difference here and skip lines 5 through 9. Amending 2012 federal tax return But see Next below line 9. Amending 2012 federal tax return     5. Amending 2012 federal tax return Fair market value before casualty     6. Amending 2012 federal tax return Fair market value after casualty     7. Amending 2012 federal tax return Decrease in fair market value. Amending 2012 federal tax return Subtract line 6 from line 5. Amending 2012 federal tax return     8. Amending 2012 federal tax return Enter the smaller of line 2 or line 7 Note for business/rental part. Amending 2012 federal tax return If the property was totally destroyed by casualty, enter on line 8, column (b) the amount from line 2, column (b). Amending 2012 federal tax return     9. Amending 2012 federal tax return Subtract line 3 from line 8. Amending 2012 federal tax return If zero or less, enter -0-. Amending 2012 federal tax return     Next: Transfer the entries from line 1 and lines 2-9, column (a), above to the corresponding lines on Form 4684, Section A. Amending 2012 federal tax return Transfer the entries from line 1 and lines 2-9, column (b), to the corresponding lines on Form 4684, Section B. Amending 2012 federal tax return Worksheet A. Amending 2012 federal tax return Cost or Other (Adjusted) Basis Caution. Amending 2012 federal tax return See the Worksheet A Instructions before you use this worksheet. Amending 2012 federal tax return         (a) Personal Part (b) Business/Rental Part 1. Amending 2012 federal tax return   Enter the purchase price of the home damaged or destroyed. Amending 2012 federal tax return (If you filed Form 2119 when you originally acquired that home to postpone gain on the sale of a previous home before May 7, 1997, enter the adjusted basis of the new home from that Form 2119. Amending 2012 federal tax return ) 1. Amending 2012 federal tax return     2. Amending 2012 federal tax return   Seller paid points for home bought after 1990. Amending 2012 federal tax return Do not include any seller-paid points you already subtracted to arrive at the amount entered on line 1 2. Amending 2012 federal tax return     3. Amending 2012 federal tax return   Subtract line 2 from line 1 3. Amending 2012 federal tax return     4. Amending 2012 federal tax return   Settlement fees or closing costs. Amending 2012 federal tax return (See Settlement costs in Publication 551. Amending 2012 federal tax return ) If line 1 includes the adjusted basis of the new home from Form 2119, skip lines 4a-4g and 5; go to line 6. Amending 2012 federal tax return         a. Amending 2012 federal tax return Abstract and recording fees 4a. Amending 2012 federal tax return       b. Amending 2012 federal tax return Legal fees (including fees for title search and preparing documents) 4b. Amending 2012 federal tax return       c. Amending 2012 federal tax return Survey fees 4c. Amending 2012 federal tax return       d. Amending 2012 federal tax return Title insurance 4d. Amending 2012 federal tax return       e. Amending 2012 federal tax return Transfer or stamp taxes 4e. Amending 2012 federal tax return       f. Amending 2012 federal tax return Amounts that the seller owed that you agreed to pay (back taxes or interest, recording or mortgage fees, and sales commissions) 4f. Amending 2012 federal tax return       g. Amending 2012 federal tax return Other 4g. Amending 2012 federal tax return     5. Amending 2012 federal tax return   Add lines 4a through 4g 5. Amending 2012 federal tax return     6. Amending 2012 federal tax return   Cost of additions and improvements. Amending 2012 federal tax return (See Increases to Basis in Publication 551. Amending 2012 federal tax return ) Do not include any additions and improvements included on line 1 6. Amending 2012 federal tax return     7. Amending 2012 federal tax return   Special tax assessments paid for local improvements, such as streets and sidewalks 7. Amending 2012 federal tax return     8. Amending 2012 federal tax return   Other increases to basis 8. Amending 2012 federal tax return     9. Amending 2012 federal tax return   Add lines 3, 5, 6, 7, and 8 9. Amending 2012 federal tax return     10. Amending 2012 federal tax return   Depreciation allowed or allowable, related to the business use or rental of the home 10. Amending 2012 federal tax return 0   11. Amending 2012 federal tax return   Other decreases to basis (See Decreases to Basis in Publication 551. Amending 2012 federal tax return ) 11. Amending 2012 federal tax return     12. Amending 2012 federal tax return   Add lines 10 and 11 12. Amending 2012 federal tax return     13. Amending 2012 federal tax return   Cost or other (adjusted) basis of home damaged or destroyed. Amending 2012 federal tax return Subtract line 12 from line 9. Amending 2012 federal tax return Enter here and on Schedule 20, line 2 13. Amending 2012 federal tax return     Worksheet A Instructions. Amending 2012 federal tax return If you use Worksheet A to figure the cost or other (adjusted) basis of your home, follow these instructions. Amending 2012 federal tax return DO NOT use this worksheet to determine your basis if you acquired an interest in your home from a decedent who died in 2010 and whose executor filed Form 8939. Amending 2012 federal tax return IF. Amending 2012 federal tax return . Amending 2012 federal tax return . Amending 2012 federal tax return   THEN. Amending 2012 federal tax return . Amending 2012 federal tax return . Amending 2012 federal tax return you inherited your home from a decedent who died either before or after 2010 or from a decedent who died in 2010 and whose executor did not file Form 8939. Amending 2012 federal tax return 1 skip lines 1–4 of the worksheet. Amending 2012 federal tax return 2 find your basis using the rules under Inherited Property in Publication 551. Amending 2012 federal tax return Enter this amount on line 5 of the worksheet. Amending 2012 federal tax return 3 fill out lines 6–13 of the worksheet. Amending 2012 federal tax return you received your home as a gift 1 read Property Received as a Gift in Publication 551 and enter on lines 1 and 3 of the worksheet either the donor's adjusted basis or the home's fair market value at the time of the gift, whichever is appropriate. Amending 2012 federal tax return 2 if you can add any federal gift tax to your basis, enter that amount on line 5 of the worksheet. Amending 2012 federal tax return 3 fill out the rest of the worksheet. Amending 2012 federal tax return you received your home as a trade for other property 1 enter on line 1 of the worksheet the fair market value of the other property at the time of the trade. Amending 2012 federal tax return (But if you received your home as a trade for your previous home before May 7, 1997, and had a gain on the trade that you postponed using Form 2119, enter on line 1 of the worksheet the adjusted basis of the new home from that Form 2119. Amending 2012 federal tax return ) 2 fill out the rest of the worksheet. Amending 2012 federal tax return you built your home 1 add the purchase price of the land and the cost of building the home. Amending 2012 federal tax return Enter that total on line 1 of the worksheet. Amending 2012 federal tax return (However, if you filed a Form 2119 to postpone gain on the sale of a previous home before May 7, 1997, enter on line 1 of the worksheet the adjusted basis of the new home from that Form 2119. Amending 2012 federal tax return ) 2 fill out the rest of the worksheet. Amending 2012 federal tax return you received your home from your spouse after July 18, 1984 1 skip lines 1–4 of the worksheet. Amending 2012 federal tax return 2 enter on line 5 of the worksheet your spouse's cost or other (adjusted) basis in the home just before you received it. Amending 2012 federal tax return 3 fill out lines 6–13 of the worksheet, making adjustments to basis only for events after the transfer. Amending 2012 federal tax return you owned a home jointly with your spouse, who transferred his or her interest in the home to you after July 18, 1984     fill out one worksheet, making adjustments to basis for events both before and after the transfer. Amending 2012 federal tax return   you received your home from your spouse before July 19, 1984 1 skip lines 1–4 of the worksheet. Amending 2012 federal tax return 2 enter on line 5 of the worksheet the home's fair market value at the time you received it. Amending 2012 federal tax return 3 fill out lines 6–13 of the worksheet, making adjustments to basis only for events after the transfer. Amending 2012 federal tax return you owned a home jointly with your spouse, and your spouse transferred his or her interest in the home to you before July 19, 1984 1 fill out a worksheet, lines 1–13, making adjustments to basis only for events before the transfer. Amending 2012 federal tax return 2 multiply the amount on line 13 of that worksheet by 50% (0. Amending 2012 federal tax return 50) to get the adjusted basis of your half-interest at the time of the transfer. Amending 2012 federal tax return 3 multiply the fair market value of the home at the time of the transfer by 50% (0. Amending 2012 federal tax return 50). Amending 2012 federal tax return Generally, this is the basis of the half-interest that your spouse owned. Amending 2012 federal tax return 4 add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet. Amending 2012 federal tax return 5 complete lines 6–13 of the second worksheet, making adjustments to basis only for events after the transfer. Amending 2012 federal tax return you owned your home jointly with a nonspouse 1 fill out lines 1–13 of the worksheet. Amending 2012 federal tax return 2 multiply the amount on line 13 by your percentage of ownership to get the adjusted basis of your part-interest. Amending 2012 federal tax return Worksheet A Instructions. Amending 2012 federal tax return (Continued) IF. Amending 2012 federal tax return . Amending 2012 federal tax return . Amending 2012 federal tax return   THEN. Amending 2012 federal tax return . Amending 2012 federal tax return . Amending 2012 federal tax return you owned your home jointly with your spouse who died before 2010 and before the casualty 1 fill out a worksheet, lines 1–13, including adjustments to basis only for events before your spouse's death. Amending 2012 federal tax return 2 multiply the amount on line 13 of that worksheet by 50% (0. Amending 2012 federal tax return 50) to get the adjusted basis of your half-interest on the date of death. Amending 2012 federal tax return 3 figure the basis for the half-interest owned by your spouse. Amending 2012 federal tax return This is one-half of the fair market value on the date of death (or later alternate valuation used for estate or inheritance tax). Amending 2012 federal tax return (The basis in your half will remain one-half of the adjusted basis determined in step 2. Amending 2012 federal tax return ) 4 add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet. Amending 2012 federal tax return 5 complete lines 6–13 of the second worksheet, making adjustments to basis only for events after your spouse's death. Amending 2012 federal tax return you owned your home jointly with your spouse who died before 2010 and before the casualty, and your permanent legal home is in a community property state 1 skip lines 1–4 of the worksheet. Amending 2012 federal tax return 2 enter the amount of your basis on line 5 of the worksheet. Amending 2012 federal tax return Generally, this is the fair market value of the home at the time of death. Amending 2012 federal tax return (But see Community Property in Publication 551 for special rules. Amending 2012 federal tax return ) 3 fill out lines 6–13 of the worksheet, making adjustments to basis only for events after your spouse's death. Amending 2012 federal tax return you owned your home jointly with a nonspouse who died before 2010 and before the casualty 1 fill out lines 1–13 of the worksheet, including adjustments to basis only for events before the co-owner's death. Amending 2012 federal tax return 2 multiply the amount on line 13 by your percentage of ownership to get the adjusted basis of your part-interest on the date of death. Amending 2012 federal tax return 3 multiply the fair market value on the date of death (or later alternate valuation used for estate or inheritance tax) by the co-owner's percentage of ownership. Amending 2012 federal tax return This is the basis for the co-owner's part-interest. Amending 2012 federal tax return 4 add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet. Amending 2012 federal tax return 5 complete lines 6–13 of the second worksheet, including adjustments to basis only for events after the co-owner's death. Amending 2012 federal tax return your home was ever damaged as a result of a prior casualty 1 on line 8 of the worksheet, enter any amounts you spent to restore the home to its condition before the prior casualty. Amending 2012 federal tax return 2 on line 11 enter: any insurance reimbursements you received (or expect to receive) for the prior loss,  and any deductible casualty losses from prior years not covered by insurance. Amending 2012 federal tax return the person who sold you your home paid points on your loan and you bought your home after 1990 but before April 4, 1994. Amending 2012 federal tax return   on line 2 enter the seller-paid points only if you deducted them as home mortgage interest in the year paid (unless you used the seller-paid points to reduce the amount on line 1). Amending 2012 federal tax return the person who sold you your home paid points on your loan and you bought your home after April 3, 1994   on line 2 enter the seller-paid points even if you did not deduct them (unless you used the seller-paid points to reduce the amount on line 1). Amending 2012 federal tax return you used part of the property as your home and part of it for business or to produce rental income   you must allocate the entries on Worksheet A between the personal part (column (a)) and the business/rental part (column (b)). Amending 2012 federal tax return none of these items apply   fill out the entire worksheet. Amending 2012 federal tax return Prev  Up  Next   Home   More Online Publications