What is a Schedule SE 1040 Tax Form?

What is a Schedule SE 1040 Tax Form? Most of the wages Americans earn are familiar with payroll taxes. This fixed tax is taken from salaries to finance Social Security, Medicare, and Medicaid. Most taxpayers are also aware that their employers match their contributions to these programs.

What you may not know

What you may not know is that self-employed individuals are required to pay the share normally paid by the employer. These additional contributions to Medicare, Medicaid, and Social Security paid to self-employed individuals are referred to as self-employment taxes. You may be required to pay self-employment tax if you are self-employed or under contract either full or part-time.

IRS Tax Form 1040 Schedule SE

Form 1040 Schedule SE is the form used by taxpayers to calculate the amount owed in self-employment tax. If you are self-employed and have a net income from self-employment amounting to more than $400, your Form 1040 must include a Schedule SE.

You must also file a Schedule SE if you have a ministry income of more than $108.28. (There are exceptions for religious workers who file Form 4361 and receive IRS approval not to be taxed on that income.)

To fill out Schedule SE, you need certain data about your business. Most of this information is available on other schedules, depending on the source of income.

Here’s a quick list of what you may need to fill out an SE Schedule and where

you’ll find it, depending on your tax situation:

• Net farm gains or losses from Schedule F, track 36, and agricultural partnerships, Schedule K-1 (Form 1065) box 14, code A
• Any amounts received in Reserve Conservation Program payments, Schedule F, line 6b
• Net profit or loss from Schedule C, line 31; Schedule C-EZ, line 3; Schedule K-1, line 14 if income from other than agriculture; and Schedule K-1, line 9, code J1
• Filers with an income from a typical job will want their W-2 to come in handy

Using this information and Schedule SE, you will total the amount of income you have that is subject to self-employment tax. For most self-employed persons, the Social Security portion of the self-employment tax is required for up to $106,800 of income.

If you pay social security tax on other non-self-employment income, you may be liable for less self-employment tax. If you have income from other wages, Schedule SE will lead you through recording income from other sources and determine how much additional Social Security taxes you have. You’ll also calculate the amount owed in Medicare and Medicaid taxes by multiplying your net income from self-employment by 2.9%.

For some whistleblowers,

including those earning from agriculture or religious work, the SE Schedule can be a bit more complicated.

Farmers have several options when filling out Schedule SE. There is an optional reporting method that the farmer can choose depending on the amount of gross income or net profit. If you are a farmer in this situation, it may be wise to consult a tax professional. Experienced professionals can help you ensure you comply with all relevant tax laws, and hopefully help you minimize your tax liability in the process.

If you have a large amount of self-employment income, consider looking at the number of tax professionals who are the most profitable corporate arrangements for tax purposes. If you need help filing taxes this year, you may also want to consider Turbo Tax and H&R Block. Their free online tax software can make your tax nightmare disappear.