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1040nr ez software 12. 1040nr ez software   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. 1040nr ez software Name change. 1040nr ez software Penalty for underpayment of estimated tax. 1040nr ez software Who Must Pay Self-Employment Tax?Limited partner. 1040nr ez software Community property. 1040nr ez software 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. 1040nr ez software  For tax years beginning in 2013, the social security part of the self-employment tax increases from 10. 1040nr ez software 4% to 12. 1040nr ez software 4%. 1040nr ez software The Medicare part of the tax remains at 2. 1040nr ez software 9%. 1040nr ez software As a result, the self-employment tax is increased from 13. 1040nr ez software 3% to 15. 1040nr ez software 3%. 1040nr ez software Additional Medicare Tax. 1040nr ez software . 1040nr ez software  For tax years beginning in 2013, a 0. 1040nr ez software 9% Additional Medicare Tax applies to your Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income above a threshold amount. 1040nr ez software Use Form 8959, Additional Medicare Tax, to figure this tax. 1040nr ez software For more information, see the Instructions for Form 8959. 1040nr ez software Maximum net earnings. 1040nr ez software  The maximum net self-employment earnings subject to the social security part (12. 1040nr ez software 4%) of the self-employment tax increased to $113,700 for 2013. 1040nr ez software There is no maximum limit on earnings subject to the Medicare part (2. 1040nr ez software 9%). 1040nr ez software What's New for 2014 Maximum net earnings. 1040nr ez software  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. 1040nr ez software Introduction Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. 1040nr ez software It is similar to the social security and Medicare taxes withheld from the pay of most wage earners. 1040nr ez software You usually have to pay SE tax if you are self-employed. 1040nr ez software You are usually self-employed if you operate your own farm on land you either own or rent. 1040nr ez software You have to figure SE tax on Schedule SE (Form 1040). 1040nr ez software Farmers who have employees may have to pay the employer's share of social security and Medicare taxes, as well. 1040nr ez software See chapter 13 for information on employment taxes. 1040nr ez software Self-employment tax rate. 1040nr ez software   For tax years beginning in 2013, the self-employment tax rate is 15. 1040nr ez software 3%. 1040nr ez software The rate consists of two parts: 12. 1040nr ez software 4% for social security (old-age, survivors, and disability insurance) and 2. 1040nr ez software 9% for Medicare (hospital insurance). 1040nr ez software 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. 1040nr ez software S. 1040nr ez software Individual Income Tax Return Sch F (Form 1040) Profit or Loss From Farming Sch SE (Form 1040) Self-Employment Tax 1065 U. 1040nr ez software S. 1040nr ez software Return of Partnership Income Sch K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. 1040nr ez software See chapter 16 for information about getting publications and forms. 1040nr ez software Why Pay Self-Employment Tax? Social security benefits are available to self-employed persons just as they are to wage earners. 1040nr ez software Your payments of SE tax contribute to your coverage under the social security system. 1040nr ez software Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. 1040nr ez software How to become insured under social security. 1040nr ez software   You must be insured under the social security system before you begin receiving social security benefits. 1040nr ez software You are insured if you have the required number of credits (also called quarters of coverage). 1040nr ez software Earning credits in 2013. 1040nr ez software   You can earn a maximum of four credits per year. 1040nr ez software For 2013, you earn one credit for each $1,160 of combined wages and self-employment earnings subject to social security tax. 1040nr ez software 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. 1040nr ez software It does not matter whether the income is earned in 1 quarter or is spread over 2 or more quarters. 1040nr ez software 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. 1040nr ez software socialsecurity. 1040nr ez software gov. 1040nr ez software Making false statements to get or to increase social security benefits may subject you to penalties. 1040nr ez software The Social Security Administration (SSA) time limit for posting self-employment earnings. 1040nr ez software   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. 1040nr ez software    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. 1040nr ez software The SSA will not change its records to increase your self-employment earnings after the SSA time limit listed above. 1040nr ez software 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). 1040nr ez software This section explains how to: Obtain an SSN or ITIN, and Pay your SE tax using estimated tax. 1040nr ez software An ITIN does not entitle you to social security benefits. 1040nr ez software Obtaining an ITIN does not change your immigration or employment status under U. 1040nr ez software S. 1040nr ez software law. 1040nr ez software Obtaining a social security number. 1040nr ez software   If you have never had an SSN, apply for one using Form SS-5, Application for a Social Security Card. 1040nr ez software The application is also available in Spanish. 1040nr ez software You can get this form at any Social Security office or by calling 1-800-772-1213. 1040nr ez software    You can also download Form SS-5 from the Social Security Administration website at  www. 1040nr ez software socialsecurity. 1040nr ez software gov. 1040nr ez software   If you have a social security number from the time you were an employee, you must use that number. 1040nr ez software Do not apply for a new one. 1040nr ez software Replacing a lost social security card. 1040nr ez software   If you have a number but lost your card, file Form SS-5. 1040nr ez software You will get a new card showing your original number, not a new number. 1040nr ez software Name change. 1040nr ez software   If your name has changed since you received your social security card, complete Form SS-5 to report a name change. 1040nr ez software Obtaining an individual taxpayer identification number. 1040nr ez software   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. 1040nr ez software To apply for an ITIN, file Form W-7, Application for IRS Individual Taxpayer Identification Number. 1040nr ez software You can get this form by calling 1-800-829-3676. 1040nr ez software For more information on ITINs, see Publication 1915, Understanding Your IRS Individual Taxpayer Identification Number. 1040nr ez software Form W-7 and Publication 1915 are also available in Spanish. 1040nr ez software    You can also download Form W-7 from the IRS website at IRS. 1040nr ez software gov. 1040nr ez software Paying estimated tax. 1040nr ez software   Estimated tax is the method used to pay tax (including SE tax) on income not subject to withholding. 1040nr ez software 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. 1040nr ez software Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay the tax. 1040nr ez software   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. 1040nr ez software For more information about estimated tax for farmers, see chapter 15. 1040nr ez software Penalty for underpayment of estimated tax. 1040nr ez software   You may have to pay a penalty if you do not pay enough estimated tax by its due date. 1040nr ez software 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. 1040nr ez software The SE tax rules apply no matter how old you are and even if you are already receiving social security or Medicare benefits. 1040nr ez software Aliens. 1040nr ez software   Generally, resident aliens must pay self-employment tax under the same rules that apply to U. 1040nr ez software S. 1040nr ez software citizens. 1040nr ez software Nonresident aliens are not subject to self-employment tax. 1040nr ez software 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. 1040nr ez software S. 1040nr ez software residents for self-employment tax purposes. 1040nr ez software For more information on aliens, see Publication 519, U. 1040nr ez software S. 1040nr ez software Tax Guide for Aliens. 1040nr ez software 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. 1040nr ez software A trade or business is generally an activity carried on for a livelihood or in good faith to make a profit. 1040nr ez software Share farmer. 1040nr ez software   You are a self-employed farmer under an income-sharing arrangement if both the following apply. 1040nr ez software You produce a crop or raise livestock on land belonging to another person. 1040nr ez software Your share of the crop or livestock, or the proceeds from their sale, depends on the amount produced. 1040nr ez software 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. 1040nr ez software   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. 1040nr ez software This will depend on whether the landowner has the right to direct or control your performance of services. 1040nr ez software Example. 1040nr ez software A share farmer produces a crop on land owned by another person on a 50-50 crop-share basis. 1040nr ez software Under the terms of their agreement, the share farmer furnishes the labor and half the cost of seed and fertilizer. 1040nr ez software The landowner furnishes the machinery and equipment used to produce and harvest the crop, and half the cost of seed and fertilizer. 1040nr ez software The share farmer is provided a house in which to live. 1040nr ez software The landowner and the share farmer decide on a cropping plan. 1040nr ez software 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. 1040nr ez software The tax treatment of the landowner is discussed later under Landlord Participation in Farming. 1040nr ez software Contract farming. 1040nr ez software   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. 1040nr ez software 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. 1040nr ez software 4-H Club or FFA project. 1040nr ez software   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. 1040nr ez software Report the net income as “Other income” on line 21 of Form 1040. 1040nr ez software If necessary, attach a statement showing the gross income and expenses. 1040nr ez software 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. 1040nr ez software Such a project is generally not considered a trade or business. 1040nr ez software Partners in a partnership. 1040nr ez software   Generally, you are self-employed if you are a member of a partnership that carries on a trade or business. 1040nr ez software Limited partner. 1040nr ez software   If you are a limited partner, your partnership income is generally not subject to SE tax. 1040nr ez software 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). 1040nr ez software Business Owned and Operated by Spouses. 1040nr ez software   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. 1040nr ez software You must file Form 1065, instead of Schedule F, unless you make a joint election to be treated as a qualified joint venture. 1040nr ez software 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. 1040nr ez software Qualified joint venture. 1040nr ez software   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. 1040nr ez software For an explanation of “material participation,” see the instructions for Schedule C, line G, and the instructions for Schedule F, line E. 1040nr ez software   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. 1040nr ez software Each of you must file a separate Schedule F and a separate Schedule SE. 1040nr ez software For more information, see Qualified Joint Venture in the Instructions for Schedule SE (Form 1040). 1040nr ez software Spouse employee. 1040nr ez software   If your spouse is your employee, not your partner, you must withhold and pay social security and Medicare taxes for him or her. 1040nr ez software For more information about employment taxes, see chapter 13. 1040nr ez software Community property. 1040nr ez software   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. 1040nr ez software Do not treat any of your share as self-employment earnings of your spouse. 1040nr ez software Figuring Self-Employment Earnings Farmer. 1040nr ez software   If you are self-employed as a farmer, use Schedule F (Form 1040) to figure your self-employment earnings. 1040nr ez software Partnership income or loss. 1040nr ez software   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). 1040nr ez software Box 14 of Schedule K-1 may also provide amounts for gross farming or fishing income (code B) and gross nonfarm income (code C). 1040nr ez software 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). 1040nr ez software   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. 1040nr ez software   If the amount reported is a loss, include only the deductible amount when you figure your total self-employment earnings. 1040nr ez software   For more information, see the Partner's Instructions for Schedule K-1 (Form 1065). 1040nr ez software   For general information on partnerships, see Publication 541. 1040nr ez software More than one business. 1040nr ez software   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. 1040nr ez software A loss from one business reduces your profit from another business. 1040nr ez software 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. 1040nr ez software Community property. 1040nr ez software   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. 1040nr ez software Lost income payments. 1040nr ez software   Lost income payments received from insurance or other sources for reducing or stopping farming activities are included in self-employment earnings. 1040nr ez software These include USDA payments to compensate for lost income resulting from reductions in tobacco quotas and allotments. 1040nr ez software 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). 1040nr ez software A connection exists if it is clear the payment would not have been made but for your conduct of your farm business. 1040nr ez software Gain or loss. 1040nr ez software   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. 1040nr ez software It does not matter whether the disposition is a sale, exchange, or involuntary conversion. 1040nr ez software For example, gains or losses from the disposition of the following types of property are not included in self-employment earnings. 1040nr ez software Investment property. 1040nr ez software Depreciable property or other fixed assets used in your trade or business. 1040nr ez software 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. 1040nr ez software Unharvested standing crops sold with land held more than 1 year. 1040nr ez software 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. 1040nr ez software   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. 1040nr ez software For more information on electing to treat the cutting of timber as a sale or exchange, see Timber in chapter 8. 1040nr ez software Wages and salaries. 1040nr ez software   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. 1040nr ez software   Wages paid in kind to you for agricultural labor, such as commodity wages, are not included in self-employment earnings. 1040nr ez software Retired partner. 1040nr ez software   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. 1040nr ez software The retired partner performs no services for the partnership during the year. 1040nr ez software The retired partner is owed only the retirement payments. 1040nr ez software The retired partner's share (if any) of the partnership capital was fully paid to the retired partner. 1040nr ez software The payments to the retired partner are lifelong periodic payments. 1040nr ez software Conservation Reserve Program (CRP) payments. 1040nr ez software   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. 1040nr ez software You must include the annual rental payments and any onetime incentive payment you receive under the program on Schedule F, lines 4a and 4b. 1040nr ez software Cost share payments you receive may qualify for the costsharing exclusion. 1040nr ez software See Cost-Sharing Exclusion (Improvements), above. 1040nr ez software CRP payments are reported to you on Form 1099G. 1040nr ez software Individuals who are receiving Social Security retirement or disability benefits may exclude CRP payments when calculating self-employment tax. 1040nr ez software See the instructions for Schedule SE (Form 1040). 1040nr ez software Self-employed health insurance deduction. 1040nr ez software   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). 1040nr ez software 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. 1040nr ez software 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. 1040nr ez software Crop shares. 1040nr ez software   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. 1040nr ez software Feeding such crop shares to livestock is considered using them. 1040nr ez software Your gross income for figuring your self-employment earnings includes the fair market value of the crop shares when they are used as feed. 1040nr ez software Material participation for landlords. 1040nr ez software   You materially participate if you have an arrangement with your tenant for your participation and you meet one or more of the following tests. 1040nr ez software You do at least three of the following. 1040nr ez software Pay, using cash or credit, at least half the direct costs of producing the crop or livestock. 1040nr ez software Furnish at least half the tools, equipment, and livestock used in the production activities. 1040nr ez software Advise or consult with your tenant. 1040nr ez software Inspect the production activities periodically. 1040nr ez software You regularly and frequently make, or take an important part in making, management decisions substantially contributing to or affecting the success of the enterprise. 1040nr ez software You work 100 hours or more spread over a period of 5 weeks or more in activities connected with agricultural production. 1040nr ez software You do things that, considered in their totality, show you are materially and significantly involved in the production of the farm commodities. 1040nr ez software These tests may be used as general guides for determining whether you are a material participant. 1040nr ez software Example. 1040nr ez software Drew Houston agrees to produce a crop on J. 1040nr ez software Clarke's cotton farm, with each receiving half the proceeds. 1040nr ez software Clarke advises Houston when to plant, spray, and pick the cotton. 1040nr ez software During the growing season, Clarke inspects the crop every few days to determine whether Houston is properly taking care of the crop. 1040nr ez software Houston furnishes all labor needed to grow and harvest the crop. 1040nr ez software 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. 1040nr ez software The income Clarke receives from his cotton farm is included in his self-employment earnings. 1040nr ez software Methods for Figuring Net Earnings There are three ways to figure your net earnings from self-employment. 1040nr ez software The regular method. 1040nr ez software The farm optional method. 1040nr ez software The nonfarm optional method. 1040nr ez software You must use the regular method unless you are eligible to use one or both of the optional methods. 1040nr ez software See Figure 12-1 , shown later. 1040nr ez software Figure 12-1. 1040nr ez software Can I Use the Optional Methods? Please click here for the text description of the image. 1040nr ez software Figure 12–1. 1040nr ez software 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. 1040nr ez software You want to receive credit for social security benefit coverage. 1040nr ez software You incurred child or dependent care expenses for which you could claim a credit. 1040nr ez software (An optional method may increase your earned income, which could increase your credit. 1040nr ez software ) You are entitled to the earned income credit. 1040nr ez software (An optional method may increase your earned income, which could increase your credit. 1040nr ez software ) You are entitled to the additional child tax credit. 1040nr ez software (An optional method may increase your earned income, which could increase your credit. 1040nr ez software ) Effects of using an optional method. 1040nr ez software   Using an optional method could increase your SE tax. 1040nr ez software Paying more SE tax may result in you getting higher social security disability or retirement benefits. 1040nr ez software   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. 1040nr ez software   The optional methods may be used only to figure your SE tax. 1040nr ez software To figure your income tax, include your actual self-employment earnings in gross income, regardless of which method you use to determine SE tax. 1040nr ez software Regular Method Multiply your total self-employment earnings by 92. 1040nr ez software 35% (. 1040nr ez software 9235) to get your net earnings under the regular method. 1040nr ez software See Short Schedule SE, line 4, or Long Schedule SE, line 4a. 1040nr ez software Net earnings figured using the regular method are also called “actual net earnings. 1040nr ez software ” Farm Optional Method Use the farm optional method only for self-employment earnings from a farming business. 1040nr ez software You can use this method if you meet either of the following tests. 1040nr ez software Your gross farm income is $6,960 or less. 1040nr ez software Your net farm profits are less than $5,024. 1040nr ez software Gross farm income. 1040nr ez software   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). 1040nr ez software Net farm profits. 1040nr ez software   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). 1040nr ez software 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. 1040nr ez software For more information, see Partnership income or loss , earlier. 1040nr ez software Figuring farm net earnings. 1040nr ez software   If you meet either of the two tests explained above, use Table 12-1. 1040nr ez software Figuring Farm Net Earnings , to figure your net earnings from self-employment under the farm optional method. 1040nr ez software Table 12-1. 1040nr ez software Figuring Farm Net Earnings IF your gross farm income  is. 1040nr ez software . 1040nr ez software . 1040nr ez software THEN your net earnings are equal to. 1040nr ez software . 1040nr ez software . 1040nr ez software $6,960 or less Two-thirds of your gross farm income. 1040nr ez software More than $6,960 $4,640 Optional method can reduce or eliminate SE tax. 1040nr ez software   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. 1040nr ez software Your actual net earnings are your net earnings figured using the regular method, explained earlier. 1040nr ez software Example. 1040nr ez software Your gross farm income is $540 and your net farm profit is $460. 1040nr ez software Consequently, your net earnings figured under the farm optional method are $360 (2/3 of $540) and your actual net earnings are $425 (92. 1040nr ez software 35% of $460). 1040nr ez software You owe no SE tax if you use the optional method because your net earnings under the farm optional method are less than $400. 1040nr ez software Nonfarm Optional Method This is an optional method available for determining net earnings from nonfarm self-employment, much like the farm optional method. 1040nr ez software If you are also engaged in a nonfarm business, you may be able to use this method to figure your nonfarm net earnings. 1040nr ez software 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. 1040nr ez software For more information about the nonfarm optional method, see Publication 334. 1040nr ez software You cannot combine farm and nonfarm self-employment earnings to figure your net earnings under either of the optional methods. 1040nr ez software 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. 1040nr ez software You can report less than your total actual farm and nonfarm net earnings but not less than actual nonfarm net earnings. 1040nr ez software If you use both optional methods, you can report no more than $4,640 as your combined net earnings from self-employment. 1040nr ez software Reporting Self-Employment Tax Use Schedule SE (Form 1040) to figure and report your SE tax. 1040nr ez software Then, enter the SE tax on line 56 of Form 1040 and attach Schedule SE to Form 1040. 1040nr ez software Most taxpayers can use Section A–Short Schedule SE to figure their SE tax. 1040nr ez software However, certain taxpayers must use Section B–Long Schedule SE. 1040nr ez software Use the chart on page 1 of Schedule SE to find out which one to use. 1040nr ez software 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. 1040nr ez software Deduction for employer-equivalent portion of self-employment tax. 1040nr ez software   You can deduct the employer-equivalent portion of your SE tax in figuring your adjusted gross income. 1040nr ez software This deduction only affects your income tax. 1040nr ez software It does not affect either your net earnings from self-employment or your SE tax. 1040nr ez software   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. 1040nr ez software Joint return. 1040nr ez software   Even if you file a joint return, you cannot file a joint Schedule SE. 1040nr ez software This is true whether one spouse or both spouses have self-employment earnings. 1040nr ez software Your spouse is not considered self-employed just because you are. 1040nr ez software If both of you have self-employment earnings, each of you must complete a separate Schedule SE. 1040nr ez software 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. 1040nr ez software Attach both schedules to the joint return. 1040nr ez software 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 . 1040nr ez software Prev  Up  Next   Home   More Online Publications
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1040nr ez software Publication 15-B - Introductory Material Table of Contents Future Developments What's New Reminders Introduction Future Developments For the latest information about developments related to Publication 15-B, such as legislation enacted after it was published, go to www. 1040nr ez software irs. 1040nr ez software gov/pub15b. 1040nr ez software What's New Cents-per-mile rule. 1040nr ez software  The business mileage rate for 2014 is 56 cents per mile. 1040nr ez software You may use this rate to reimburse an employee for business use of a personal vehicle, and under certain conditions, you may use the rate under the cents-per-mile rule to value the personal use of a vehicle you provide to an employee. 1040nr ez software See Cents-Per-Mile Rule in section 3. 1040nr ez software Qualified parking exclusion and commuter transportation benefit. 1040nr ez software . 1040nr ez software  For 2014, the monthly exclusion for qualified parking is $250 and the monthly exclusion for commuter highway vehicle transportation and transit passes is $130. 1040nr ez software See Qualified Transportation Benefits in section 2. 1040nr ez software Same-sex Marriage. 1040nr ez software  For federal tax purposes, individuals of the same sex are considered married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage. 1040nr ez software For more information, see Revenue Ruling 2013-17, 2013-38 I. 1040nr ez software R. 1040nr ez software B. 1040nr ez software 201, available at www. 1040nr ez software irs. 1040nr ez software gov/irb/2013-38_IRB/ar07. 1040nr ez software html. 1040nr ez software Notice 2013-61 provides special administrative procedures for employers to make claims for refund or adjustments of overpayments of social security and Medicare taxes with respect to certain same-sex spouse benefits before expiration of the period of limitations. 1040nr ez software Notice 2013-61, 2013-44 I. 1040nr ez software R. 1040nr ez software B. 1040nr ez software 432, is available at www. 1040nr ez software irs. 1040nr ez software gov/irb/2013-44_IRB/ar10. 1040nr ez software html. 1040nr ez software Recent changes to certain rules for cafeteria plans. 1040nr ez software  Notice 2013-71, 2013-47 I. 1040nr ez software R. 1040nr ez software B. 1040nr ez software 532, available at www. 1040nr ez software irs. 1040nr ez software gov/irb/2013-47_IRB/ar10. 1040nr ez software html, discusses recent changes to the “use-or-lose” rule for health flexible spending arrangements (FSAs) and clarifies the transitional rule for 2013-2014 non-calendar year salary reduction elections. 1040nr ez software See Notice 2013-71 for details on these changes. 1040nr ez software Reminders $2,500 limit on a health flexible spending arrangement (FSA). 1040nr ez software  For plan years beginning after December 31, 2012, a cafeteria plan may not allow an employee to request salary reduction contributions for a health FSA in excess of $2,500. 1040nr ez software For plan years beginning after December 31, 2013, the limit is unchanged at $2,500. 1040nr ez software For more information, see Cafeteria Plans in section 1. 1040nr ez software Additional Medicare Tax withholding. 1040nr ez software  In addition to withholding Medicare tax at 1. 1040nr ez software 45%, you must withhold a 0. 1040nr ez software 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. 1040nr ez software You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. 1040nr ez software Additional Medicare Tax is only imposed on the employee. 1040nr ez software There is no employer share of Additional Medicare Tax. 1040nr ez software All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. 1040nr ez software Unless otherwise noted, references to Medicare tax include Additional Medicare Tax. 1040nr ez software For more information on what wages are subject to Medicare tax, see Table 2-1, later, and the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15, (Circular E), Employer's Tax Guide. 1040nr ez software For more information on Additional Medicare Tax, visit IRS. 1040nr ez software gov and enter “Additional Medicare Tax” in the search box. 1040nr ez software Photographs of missing children. 1040nr ez software  The IRS is a proud partner with the National Center for Missing and Exploited Children. 1040nr ez software Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. 1040nr ez software You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. 1040nr ez software Introduction This publication supplements Publication 15 (Circular E), Employer's Tax Guide, and Publication 15-A, Employer's Supplemental Tax Guide. 1040nr ez software It contains information for employers on the employment tax treatment of fringe benefits. 1040nr ez software Comments and suggestions. 1040nr ez software   We welcome your comments about this publication and your suggestions for future editions. 1040nr ez software   You can write to us at the following address:  Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. 1040nr ez software NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. 1040nr ez software Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. 1040nr ez software   You can also send us comments from www. 1040nr ez software irs. 1040nr ez software gov/formspubs. 1040nr ez software Click on More Information and then click on Comment on Tax Forms and Publications. 1040nr ez software   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. 1040nr ez software Prev  Up  Next   Home   More Online Publications