Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

File Federal State Taxes Free

E File Back TaxesIrs 1040 EzWww Irs Gov Amended ReturnIrs Form 1040 EzFree 1040ez FormH&r Block Free FilingAmended TaxTax Table For 1040ez Form1040ez File On Line1040 Ez Forms And InstructionsIrs Free File Using Form 1040 EzIrs 1040 Ez 20122011 Tax Forms 1040ezIncome Tax For UnemployedFile Tax Return For 2012File Tax ReturnSearch FreetaxusaHow Do I File An Amended Return For 2012How To File An Amendment For TaxesHow To Do An Amended Tax Return On Turbotax1040ez For 2010Irs 2012 Tax Forms 1040Nj 1040nr 20121040x Amended Return 2012Irs Addendum FormTaxes For 2012Www State Tax ReturnHow To Complete A 1040x2014 1040 Ez FormIrs Tax Form 10402011 Tax BookletTax Cut Software1040ezfile1040 Ez Tax TableHow To File 2006 Taxes Online Free1040x 2010 FormE File 2009 Taxes FreeI Need A 1040x Form2013 Amended 1040How Do I File My 2011 Taxes

File Federal State Taxes Free

File federal state taxes free 1. File federal state taxes free   Definitions You Need To Know Table of Contents Other options. File federal state taxes free Exception. File federal state taxes free Certain terms used in this publication are defined below. File federal state taxes free The same term used in another publication may have a slightly different meaning. File federal state taxes free Annual additions. File federal state taxes free   Annual additions are the total of all your contributions in a year, employee contributions (not including rollovers), and forfeitures allocated to a participant's account. File federal state taxes free Annual benefits. File federal state taxes free   Annual benefits are the benefits to be paid yearly in the form of a straight life annuity (with no extra benefits) under a plan to which employees do not contribute and under which no rollover contributions are made. File federal state taxes free Business. File federal state taxes free   A business is an activity in which a profit motive is present and economic activity is involved. File federal state taxes free Service as a newspaper carrier under age 18 or as a public official is not a business. File federal state taxes free Common-law employee. File federal state taxes free   A common-law employee is any individual who, under common law, would have the status of an employee. File federal state taxes free A leased employee can also be a common-law employee. File federal state taxes free   A common-law employee is a person who performs services for an employer who has the right to control and direct the results of the work and the way in which it is done. File federal state taxes free For example, the employer: Provides the employee's tools, materials, and workplace, and Can fire the employee. File federal state taxes free   Common-law employees are not self-employed and cannot set up retirement plans for income from their work, even if that income is self-employment income for social security tax purposes. File federal state taxes free For example, common-law employees who are ministers, members of religious orders, full-time insurance salespeople, and U. File federal state taxes free S. File federal state taxes free citizens employed in the United States by foreign governments cannot set up retirement plans for their earnings from those employments, even though their earnings are treated as self-employment income. File federal state taxes free   However, an individual may be a common-law employee and a self-employed person as well. File federal state taxes free For example, an attorney can be a corporate common-law employee during regular working hours and also practice law in the evening as a self-employed person. File federal state taxes free In another example, a minister employed by a congregation for a salary is a common-law employee even though the salary is treated as self-employment income for social security tax purposes. File federal state taxes free However, fees reported on Schedule C (Form 1040), Profit or Loss From Business, for performing marriages, baptisms, and other personal services are self-employment earnings for qualified plan purposes. File federal state taxes free Compensation. File federal state taxes free   Compensation for plan allocations is the pay a participant received from you for personal services for a year. File federal state taxes free You can generally define compensation as including all the following payments. File federal state taxes free Wages and salaries. File federal state taxes free Fees for professional services. File federal state taxes free Other amounts received (cash or noncash) for personal services actually rendered by an employee, including, but not limited to, the following items. File federal state taxes free Commissions and tips. File federal state taxes free Fringe benefits. File federal state taxes free Bonuses. File federal state taxes free   For a self-employed individual, compensation means the earned income, discussed later, of that individual. File federal state taxes free   Compensation generally includes amounts deferred in the following employee benefit plans. File federal state taxes free These amounts are elective deferrals. File federal state taxes free Qualified cash or deferred arrangement (section 401(k) plan). File federal state taxes free Salary reduction agreement to contribute to a tax-sheltered annuity (section 403(b) plan), a SIMPLE IRA plan, or a SARSEP. File federal state taxes free Section 457 nonqualified deferred compensation plan. File federal state taxes free Section 125 cafeteria plan. File federal state taxes free   However, an employer can choose to exclude elective deferrals under the above plans from the definition of compensation. File federal state taxes free The limit on elective deferrals is discussed in chapter 2 under Salary Reduction Simplified Employee Pension (SARSEP) and in chapter 4. File federal state taxes free Other options. File federal state taxes free   In figuring the compensation of a participant, you can treat any of the following amounts as the employee's compensation. File federal state taxes free The employee's wages as defined for income tax withholding purposes. File federal state taxes free The employee's wages you report in box 1 of Form W-2, Wage and Tax Statement. File federal state taxes free The employee's social security wages (including elective deferrals). File federal state taxes free   Compensation generally cannot include either of the following items. File federal state taxes free Nontaxable reimbursements or other expense allowances. File federal state taxes free Deferred compensation (other than elective deferrals). File federal state taxes free SIMPLE plans. File federal state taxes free   A special definition of compensation applies for SIMPLE plans. File federal state taxes free See chapter 3. File federal state taxes free Contribution. File federal state taxes free   A contribution is an amount you pay into a plan for all those participating in the plan, including self-employed individuals. File federal state taxes free Limits apply to how much, under the contribution formula of the plan, can be contributed each year for a participant. File federal state taxes free Deduction. File federal state taxes free   A deduction is the plan contributions you can subtract from gross income on your federal income tax return. File federal state taxes free Limits apply to the amount deductible. File federal state taxes free Earned income. File federal state taxes free   Earned income is net earnings from self-employment, discussed later, from a business in which your services materially helped to produce the income. File federal state taxes free   You can also have earned income from property your personal efforts helped create, such as royalties from your books or inventions. File federal state taxes free Earned income includes net earnings from selling or otherwise disposing of the property, but it does not include capital gains. File federal state taxes free It includes income from licensing the use of property other than goodwill. File federal state taxes free   Earned income includes amounts received for services by self-employed members of recognized religious sects opposed to social security benefits who are exempt from self-employment tax. File federal state taxes free   If you have more than one business, but only one has a retirement plan, only the earned income from that business is considered for that plan. File federal state taxes free Employer. File federal state taxes free   An employer is generally any person for whom an individual performs or did perform any service, of whatever nature, as an employee. File federal state taxes free A sole proprietor is treated as his or her own employer for retirement plan purposes. File federal state taxes free However, a partner is not an employer for retirement plan purposes. File federal state taxes free Instead, the partnership is treated as the employer of each partner. File federal state taxes free Highly compensated employee. File federal state taxes free   A highly compensated employee is an individual who: Owned more than 5% of the interest in your business at any time during the year or the preceding year, regardless of how much compensation that person earned or received, or For the preceding year, received compensation from you of more than $115,000 (if the preceding year is 2012, 2013, or 2014) and, if you so choose, was in the top 20% of employees when ranked by compensation. File federal state taxes free Leased employee. File federal state taxes free   A leased employee who is not your common-law employee must generally be treated as your employee for retirement plan purposes if he or she does all the following. File federal state taxes free Provides services to you under an agreement between you and a leasing organization. File federal state taxes free Has performed services for you (or for you and related persons) substantially full time for at least 1 year. File federal state taxes free Performs services under your primary direction or control. File federal state taxes free Exception. File federal state taxes free   A leased employee is not treated as your employee if all the following conditions are met. File federal state taxes free Leased employees are not more than 20% of your non-highly compensated work force. File federal state taxes free The employee is covered under the leasing organization's qualified pension plan. File federal state taxes free The leasing organization's plan is a money purchase pension plan that has all the following provisions. File federal state taxes free Immediate participation. File federal state taxes free (This requirement does not apply to any individual whose compensation from the leasing organization in each plan year during the 4-year period ending with the plan year is less than $1,000. File federal state taxes free ) Full and immediate vesting. File federal state taxes free A nonintegrated employer contribution rate of at least 10% of compensation for each participant. File federal state taxes free However, if the leased employee is your common-law employee, that employee will be your employee for all purposes, regardless of any pension plan of the leasing organization. File federal state taxes free Net earnings from self-employment. File federal state taxes free   For SEP and qualified plans, net earnings from self-employment is your gross income from your trade or business (provided your personal services are a material income-producing factor) minus allowable business deductions. File federal state taxes free Allowable deductions include contributions to SEP and qualified plans for common-law employees and the deduction allowed for the deductible part of your self-employment tax. File federal state taxes free   Net earnings from self-employment does not include items excluded from gross income (or their related deductions) other than foreign earned income and foreign housing cost amounts. File federal state taxes free   For the deduction limits, earned income is net earnings for personal services actually rendered to the business. File federal state taxes free You take into account the income tax deduction for the deductible part of self-employment tax and the deduction for contributions to the plan made on your behalf when figuring net earnings. File federal state taxes free   Net earnings include a partner's distributive share of partnership income or loss (other than separately stated items, such as capital gains and losses). File federal state taxes free It does not include income passed through to shareholders of S corporations. File federal state taxes free Guaranteed payments to limited partners are net earnings from self-employment if they are paid for services to or for the partnership. File federal state taxes free Distributions of other income or loss to limited partners are not net earnings from self-employment. File federal state taxes free   For SIMPLE plans, net earnings from self-employment is the amount on line 4 of Short Schedule SE or line 6 of Long Schedule SE (Form 1040), Self-Employment Tax, before subtracting any contributions made to the SIMPLE plan for yourself. File federal state taxes free Qualified plan. File federal state taxes free   A qualified plan is a retirement plan that offers a tax-favored way to save for retirement. File federal state taxes free You can deduct contributions made to the plan for your employees. File federal state taxes free Earnings on these contributions are generally tax free until distributed at retirement. File federal state taxes free Profit-sharing, money purchase, and defined benefit plans are qualified plans. File federal state taxes free A 401(k) plan is also a qualified plan. File federal state taxes free Participant. File federal state taxes free   A participant is an eligible employee who is covered by your retirement plan. File federal state taxes free See the discussions of the different types of plans for the definition of an employee eligible to participate in each type of plan. File federal state taxes free Partner. File federal state taxes free   A partner is an individual who shares ownership of an unincorporated trade or business with one or more persons. File federal state taxes free For retirement plans, a partner is treated as an employee of the partnership. File federal state taxes free Self-employed individual. File federal state taxes free   An individual in business for himself or herself, and whose business is not incorporated, is self-employed. File federal state taxes free Sole proprietors and partners are self-employed. File federal state taxes free Self-employment can include part-time work. File federal state taxes free   Not everyone who has net earnings from self-employment for social security tax purposes is self-employed for qualified plan purposes. File federal state taxes free See Common-law employee and Net earnings from self-employment , earlier. File federal state taxes free   In addition, certain fishermen may be considered self-employed for setting up a qualified plan. File federal state taxes free See Publication 595, Capital Construction Fund for Commercial Fishermen, for the special rules used to determine whether fishermen are self-employed. File federal state taxes free Sole proprietor. File federal state taxes free   A sole proprietor is an individual who owns an unincorporated business by himself or herself, including a single member limited liability company that is treated as a disregarded entity for tax purposes. File federal state taxes free For retirement plans, a sole proprietor is treated as both an employer and an employee. File federal state taxes free Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

SOI Tax Stats - International Business Tax Statistics

Return to Tax Stats home page

Here you will find links to the Statistics of Income studies relating to the international business sector. For each of these areas, there are text articles and/or statistical tables that include both recent and historical data.

International Individual Tax Statistics

Overview of U.S. Taxes on International Income

 

Controlled Foreign Corporations Provides data on activities of foreign corporations controlled by U.S. corporations. Data are taken from Form 5471.

Corporate Foreign Tax Credits

Corporate Foreign Tax Credit, Tax Year 2010 One Sheet

Provides data on foreign income and taxes reported by U.S. corporations claiming foreign tax credits. These credits are claimed to reduce or eliminate the double taxation of income earned overseas.  Data are taken from Form 1118.
Foreign Controlled Domestic Corporations Provides data on U.S. corporations with 50-percent-or-more stock ownership by a single foreign "person."  Covers balance sheet, income statement, and tax-related data.  Data are taken from Form 1120 series.
Foreign Corporations with U.S. Business Operations Provides data on foreign corporations with income connected to a U.S. trade or business.  Covers income statement and selected tax items.  Data are taken from Form 1120-F
Foreign Sales Corporations/IC-DISC'S Foreign Sales Corporations (FSC's) are foreign companies created by a "parent" shareholder to derive tax benefits from the export of U.S. products.  Interest-Charge Domestic Sales Corporations (IC-DISC's) are domestic companies created for a similar purpose.  Data are taken from Forms 1120-FSC and 1120-IC DISC.
Foreign Trusts Provides data on foreign trusts that have U.S. "persons" as grantors, transferors, or beneficiaries.  This study is conducted every 4 years.  Data are taken from Forms 3520 and 3520-A.
International Boycotts Provides data on the business operations of U.S. entities that participate in international economic boycotts not sanctioned by the U.S. Government.  Data are taken from Form 5713.

One-Time Dividend Received Deduction

Provides data on a one-time deduction of extraordinary qualifying cash dividends received from controlled foreign corporations. U.S. corporations were eligible to claim this deduction for accounting periods ending between October 2004 and October 2006.  Data are taken from Form 8895.

Transactions of Foreign-Owned Corporations

Provides data on financial transactions (such as stock purchases or interest payments) between U.S. corporations and their foreign owners.  This study is conducted every 2 years.  Data are taken from Form 5472.

U.S. Possessions Corporations Provides data on income statements, balance sheets, tax, and "possessions tax credit" for qualifying U.S. possessions corporations.  Most of these corporations are located in Puerto Rico.  The Statistics of Income Division no longer conducts a study on U.S. Possessions Corporations.  Data are taken from Forms 1120, 5712, and 5735.
Page Last Reviewed or Updated: 29-Jan-2014

The File Federal State Taxes Free

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