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How To File School Taxes

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How To File School Taxes

How to file school taxes 5. How to file school taxes   Taxes Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: When To Deduct Taxes Real Estate TaxesSeparate elections. How to file school taxes Making the election. How to file school taxes Form 3115. How to file school taxes Income TaxesAccrual of contested income taxes. How to file school taxes Employment Taxes Other TaxesAdditional Medicare Tax. How to file school taxes What's New Additional Medicare Tax. How to file school taxes  Beginning in 2013, you must withhold a 0. How to file school taxes 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. How to file school taxes Also, self-employed individuals may be required to pay Additional Medicare Tax on self-employment income. How to file school taxes See Employment Taxes , and Self-employment tax , later. How to file school taxes Introduction You can deduct various federal, state, local, and foreign taxes directly attributable to your trade or business as business expenses. How to file school taxes You cannot deduct federal income taxes, estate and gift taxes, or state inheritance, legacy, and succession taxes. How to file school taxes Topics - This chapter discusses: When to deduct taxes Real estate taxes Income taxes Employment taxes Other taxes Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 334 Tax Guide for Small Business 510 Excise Taxes 538 Accounting Periods and Methods 551 Basis of Assets Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch SE (Form 1040) Self-Employment Tax 3115 Application for Change in Accounting Method 8959 Additional Medicare Tax See chapter 12 for information about getting publications and forms. How to file school taxes When To Deduct Taxes Generally, you can only deduct taxes in the year you pay them. How to file school taxes This applies whether you use the cash method or an accrual method of accounting. How to file school taxes Under an accrual method, you can deduct a tax before you pay it if you meet the exception for recurring items discussed under Economic Performance in Publication 538. How to file school taxes You can also elect to ratably accrue real estate taxes as discussed later under Real Estate Taxes . How to file school taxes Limit on accrual of taxes. How to file school taxes   A taxing jurisdiction can require the use of a date for accruing taxes that is earlier than the date it originally required. How to file school taxes However, if you use an accrual method, and can deduct the tax before you pay it, use the original accrual date for the year of change and all future years to determine when you can deduct the tax. How to file school taxes Example. How to file school taxes Your state imposes a tax on personal property used in a trade or business conducted in the state. How to file school taxes This tax is assessed and becomes a lien as of July 1 (accrual date). How to file school taxes In 2013, the state changed the assessment and lien dates from July 1, 2014, to December 31, 2013, for property tax year 2014. How to file school taxes Use the original accrual date (July 1, 2014) to determine when you can deduct the tax. How to file school taxes You must also use the July 1 accrual date for all future years to determine when you can deduct the tax. How to file school taxes Uniform capitalization rules. How to file school taxes   Uniform capitalization rules apply to certain taxpayers who produce real property or tangible personal property for use in a trade or business or for sale to customers. How to file school taxes They also apply to certain taxpayers who acquire property for resale. How to file school taxes Under these rules, you either include certain costs in inventory or capitalize certain expenses related to the property, such as taxes. How to file school taxes For more information, see chapter 1. How to file school taxes Carrying charges. How to file school taxes   Carrying charges include taxes you pay to carry or develop real estate or to carry, transport, or install personal property. How to file school taxes You can elect to capitalize carrying charges not subject to the uniform capitalization rules if they are otherwise deductible. How to file school taxes For more information, see chapter 7. How to file school taxes Refunds of taxes. How to file school taxes   If you receive a refund for any taxes you deducted in an earlier year, include the refund in income to the extent the deduction reduced your federal income tax in the earlier year. How to file school taxes For more information, see Recovery of amount deducted (tax benefit rule) in chapter 1. How to file school taxes    You must include in income any interest you receive on tax refunds. How to file school taxes Real Estate Taxes Deductible real estate taxes are any state, local, or foreign taxes on real estate levied for the general public welfare. How to file school taxes The taxing authority must base the taxes on the assessed value of the real estate and charge them uniformly against all property under its jurisdiction. How to file school taxes Deductible real estate taxes generally do not include taxes charged for local benefits and improvements that increase the value of the property. How to file school taxes See Taxes for local benefits , later. How to file school taxes If you use an accrual method, you generally cannot accrue real estate taxes until you pay them to the government authority. How to file school taxes However, you can elect to ratably accrue the taxes during the year. How to file school taxes See Electing to ratably accrue , later. How to file school taxes Taxes for local benefits. How to file school taxes   Generally, you cannot deduct taxes charged for local benefits and improvements that tend to increase the value of your property. How to file school taxes These include assessments for streets, sidewalks, water mains, sewer lines, and public parking facilities. How to file school taxes You should increase the basis of your property by the amount of the assessment. How to file school taxes   You can deduct taxes for these local benefits only if the taxes are for maintenance, repairs, or interest charges related to those benefits. How to file school taxes If part of the tax is for maintenance, repairs, or interest, you must be able to show how much of the tax is for these expenses to claim a deduction for that part of the tax. How to file school taxes Example. How to file school taxes To improve downtown commercial business, Waterfront City converted a downtown business area street into an enclosed pedestrian mall. How to file school taxes The city assessed the full cost of construction, financed with 10-year bonds, against the affected properties. How to file school taxes The city is paying the principal and interest with the annual payments made by the property owners. How to file school taxes The assessments for construction costs are not deductible as taxes or as business expenses, but are depreciable capital expenses. How to file school taxes The part of the payments used to pay the interest charges on the bonds is deductible as taxes. How to file school taxes Charges for services. How to file school taxes   Water bills, sewerage, and other service charges assessed against your business property are not real estate taxes, but are deductible as business expenses. How to file school taxes Purchase or sale of real estate. How to file school taxes   If real estate is sold, the real estate taxes must be allocated between the buyer and the seller. How to file school taxes   The buyer and seller must allocate the real estate taxes according to the number of days in the real property tax year (the period to which the tax imposed relates) that each owned the property. How to file school taxes Treat the seller as paying the taxes up to but not including the date of sale. How to file school taxes Treat the buyer as paying the taxes beginning with the date of sale. How to file school taxes You can usually find this information on the settlement statement you received at closing. How to file school taxes   If you (the seller) use an accrual method and have not elected to ratably accrue real estate taxes, you are considered to have accrued your part of the tax on the date you sell the property. How to file school taxes Example. How to file school taxes Alberto Verde, a calendar year accrual method taxpayer, owns real estate in Olmo County. How to file school taxes He has not elected to ratably accrue property taxes. How to file school taxes November 30 of each year is the assessment and lien date for the current real property tax year, which is the calendar year. How to file school taxes He sold the property on June 30, 2013. How to file school taxes Under his accounting method he would not be able to claim a deduction for the taxes because the sale occurred before November 30. How to file school taxes He is treated as having accrued his part of the tax, 181/366  (January 1–June 29), on June 30, and he can deduct it for 2013. How to file school taxes Electing to ratably accrue. How to file school taxes   If you use an accrual method, you can elect to accrue real estate tax related to a definite period ratably over that period. How to file school taxes Example. How to file school taxes Juan Sanchez is a calendar year taxpayer who uses an accrual method. How to file school taxes His real estate taxes for the real property tax year, July 1, 2013, to June 30, 2014, are $1,200. How to file school taxes July 1 is the assessment and lien date. How to file school taxes If Juan elects to ratably accrue the taxes, $600 will accrue in 2013 ($1,200 × 6/12, July 1–December 31) and the balance will accrue in 2014. How to file school taxes Separate elections. How to file school taxes   You can elect to ratably accrue the taxes for each separate trade or business and for nonbusiness activities if you account for them separately. How to file school taxes Once you elect to ratably accrue real estate taxes, you must use that method unless you get permission from the IRS to change. How to file school taxes See Form 3115 , later. How to file school taxes Making the election. How to file school taxes   If you elect to ratably accrue the taxes for the first year in which you incur real estate taxes, attach a statement to your income tax return for that year. How to file school taxes The statement should show all the following items. How to file school taxes The trades or businesses to which the election applies and the accounting method or methods used. How to file school taxes The period to which the taxes relate. How to file school taxes The computation of the real estate tax deduction for that first year. How to file school taxes   Generally, you must file your return by the due date (including extensions). How to file school taxes However, if you timely filed your return for the year without electing to ratably accrue, you can still make the election by filing an amended return within 6 months after the due date of the return (excluding extensions). How to file school taxes Attach the statement to the amended return and write “Filed pursuant to section 301. How to file school taxes 9100-2” on the statement. How to file school taxes File the amended return at the same address where you filed the original return. How to file school taxes Form 3115. How to file school taxes    If you elect to ratably accrue real estate taxes for a year after the first year in which you incur real estate taxes, or if you want to revoke your election to ratably accrue real estate taxes, file Form 3115. How to file school taxes For more information, including applicable time frames for filing, see the Instructions for Form 3115. How to file school taxes Note. How to file school taxes If you are filing an application for a change in accounting method filed after January 9, 2011, for a year of change ending after April 29, 2010, see Revenue Procedure 2011-14, 2011-4 I. How to file school taxes R. How to file school taxes B. How to file school taxes 330, as modified and clarified by Revenue Procedure 2012-19, 2012-14 I. How to file school taxes R. How to file school taxes B. How to file school taxes 689, and Revenue Procedure 2012-20, 2012-14 I. How to file school taxes R. How to file school taxes B. How to file school taxes 700, or any successor. How to file school taxes Revenue Procedure 2011-14 is available at  www. How to file school taxes irs. How to file school taxes gov/irb/2011-04IRB/ar08. How to file school taxes html. How to file school taxes Income Taxes This section discusses federal, state, local, and foreign income taxes. How to file school taxes Federal income taxes. How to file school taxes   You cannot deduct federal income taxes. How to file school taxes State and local income taxes. How to file school taxes   A corporation or partnership can deduct state and local income taxes imposed on the corporation or partnership as business expenses. How to file school taxes An individual can deduct state and local income taxes only as an itemized deduction on Schedule A (Form 1040). How to file school taxes   However, an individual can deduct a state tax on gross income (as distinguished from net income) directly attributable to a trade or business as a business expense. How to file school taxes Accrual of contested income taxes. How to file school taxes   If you use an accrual method, and you contest a state or local income tax liability, you must accrue and deduct any contested amount in the tax year in which the liability is finally determined. How to file school taxes   If additional state or local income taxes for a prior year are assessed in a later year, you can deduct the taxes in the year in which they were originally imposed (the prior year) if the tax liability is not contested. How to file school taxes You cannot deduct them in the year in which the liability is finally determined. How to file school taxes    The filing of an income tax return is not considered a contest and, in the absence of an overt act of protest, you can deduct the tax in the prior year. How to file school taxes Also, you can deduct any additional taxes in the prior year if you do not show some affirmative evidence of denial of the liability. How to file school taxes   However, if you consistently deduct additional assessments in the year they are paid or finally determined (including those for which there was no contest), you must continue to do so. How to file school taxes You cannot take a deduction in the earlier year unless you receive permission to change your method of accounting. How to file school taxes For more information on accounting methods, see When Can I Deduct an Expense in chapter 1. How to file school taxes Foreign income taxes. How to file school taxes   Generally, you can take either a deduction or a credit for income taxes imposed on you by a foreign country or a U. How to file school taxes S. How to file school taxes possession. How to file school taxes However, an individual cannot take a deduction or credit for foreign income taxes paid on income that is exempt from U. How to file school taxes S. How to file school taxes tax under the foreign earned income exclusion or the foreign housing exclusion. How to file school taxes For information on these exclusions, see Publication 54, Tax Guide for U. How to file school taxes S. How to file school taxes Citizens and Resident Aliens Abroad. How to file school taxes For information on the foreign tax credit, see Publication 514, Foreign Tax Credit for Individuals. How to file school taxes Employment Taxes If you have employees, you must withhold various taxes from your employees' pay. How to file school taxes Most employers must withhold their employees' share of social security, Medicare taxes, and Additional Medicare Tax (if applicable) along with state and federal income taxes. How to file school taxes You may also need to pay certain employment taxes from your own funds. How to file school taxes These include your share of social security and Medicare taxes as an employer, along with unemployment taxes. How to file school taxes Note. How to file school taxes Additional Medicare Tax is only imposed on the employee. How to file school taxes There is no employer share of Additional Medicare Tax. How to file school taxes Your deduction for wages paid is not reduced by the social security and Medicare taxes, Additional Medicare Tax, and income taxes you withhold from your employees. How to file school taxes You can deduct the employment taxes you must pay from your own funds as taxes. How to file school taxes Example. How to file school taxes You pay your employee $18,000 a year. How to file school taxes However, after you withhold various taxes, your employee receives $14,500. How to file school taxes You also pay an additional $1,500 in employment taxes. How to file school taxes You should deduct the full $18,000 as wages. How to file school taxes You can deduct the $1,500 you pay from your own funds as taxes. How to file school taxes For more information on employment taxes, see Publication 15 (Circular E). How to file school taxes Unemployment fund taxes. How to file school taxes   As an employer, you may have to make payments to a state unemployment compensation fund or to a state disability benefit fund. How to file school taxes Deduct these payments as taxes. How to file school taxes Other Taxes The following are other taxes you can deduct if you incur them in the ordinary course of your trade or business. How to file school taxes Excise taxes. How to file school taxes   Generally, you can deduct as a business expense all excise taxes that are ordinary and necessary expenses of carrying on your trade or business. How to file school taxes However, see Fuel taxes , later. How to file school taxes   For more information on excise taxes, see Publication 510. How to file school taxes Franchise taxes. How to file school taxes   You can deduct corporate franchise taxes as a business expense. How to file school taxes Fuel taxes. How to file school taxes   Generally, taxes on gasoline, diesel fuel, and other motor fuels that you use in your business are included as part of the cost of the fuel. How to file school taxes Do not deduct these taxes as a separate item. How to file school taxes   You may be entitled to a credit or refund for federal excise tax you paid on fuels used for certain purposes. How to file school taxes For more information, see Publication 510. How to file school taxes Occupational taxes. How to file school taxes   You can deduct as a business expense an occupational tax charged at a flat rate by a locality for the privilege of working or conducting a business in the locality. How to file school taxes Personal property tax. How to file school taxes   You can deduct any tax imposed by a state or local government on personal property used in your trade or business. How to file school taxes Sales tax. How to file school taxes   Treat any sales tax you pay on a service or on the purchase or use of property as part of the cost of the service or property. How to file school taxes If the service or the cost or use of the property is a deductible business expense, you can deduct the tax as part of that service or cost. How to file school taxes If the property is merchandise bought for resale, the sales tax is part of the cost of the merchandise. How to file school taxes If the property is depreciable, add the sales tax to the basis for depreciation. How to file school taxes For more information on basis, see Publication 551. How to file school taxes    Do not deduct state and local sales taxes imposed on the buyer that you must collect and pay over to the state or local government. How to file school taxes Also, do not include these taxes in gross receipts or sales. How to file school taxes Self-employment tax. How to file school taxes   You can deduct part of your self-employment tax as a business expense in figuring your adjusted gross income. How to file school taxes This deduction only affects your income tax. How to file school taxes It does not affect your net earnings from self-employment or your self-employment tax. How to file school taxes   To deduct the tax, enter on Form 1040, line 27, the amount shown on the Deduction for one-half of self-employment tax line of Schedule SE (Form 1040). How to file school taxes   For more information on self-employment tax, see Publication 334. How to file school taxes Additional Medicare Tax. How to file school taxes   Beginning in 2013, you may be required to pay Additional Medicare Tax on self-employment income. How to file school taxes See Form 8959 and the Instructions for Form 8959 for more information on the Additional Medicare Tax. How to file school taxes Prev  Up  Next   Home   More Online Publications
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The How To File School Taxes

How to file school taxes 10. How to file school taxes   Self-Employment (SE) Tax Table of Contents Who Must Pay SE Tax?Special Rules and Exceptions Figuring Earnings Subject to SE Tax Farm Optional Method Using Both Optional Methods Reporting Self-Employment Tax The SE tax rules apply no matter how old you are and even if you are already receiving social security and Medicare benefits. How to file school taxes Who Must Pay SE Tax? Generally, you must pay SE tax and file Schedule SE (Form 1040) if your net earnings from self-employment were $400 or more. How to file school taxes Use Schedule SE to figure net earnings from self-employment. How to file school taxes Sole proprietor or independent contractor. How to file school taxes   If you are self-employed as a sole proprietor or independent contractor, you generally use Schedule C or C-EZ (Form 1040) to figure your earnings subject to SE tax. How to file school taxes SE tax rate. How to file school taxes    For 2013, the SE tax rate on net earnings is 15. How to file school taxes 3% (12. How to file school taxes 4% social security tax plus 2. How to file school taxes 9% Medicare tax). How to file school taxes Maximum earnings subject to self-employment tax. How to file school taxes    Only the first $113,700 of your combined wages, tips, and net earnings in 2013 is subject to any combination of the 12. How to file school taxes 4% social security part of SE tax, social security tax, or railroad retirement (tier 1) tax. How to file school taxes   All of your combined wages, tips, and net earnings in 2013 are subject to any combination of the 2. How to file school taxes 9% Medicare part of SE tax, social security tax, or railroad retirement (tier 1) tax. How to file school taxes   If your wages and tips are subject to either social security or railroad retirement (tier 1) tax, or both, and total at least $113,700, do not pay the 12. How to file school taxes 4% social security part of the SE tax on any of your net earnings. How to file school taxes However, you must pay the 2. How to file school taxes 9% Medicare part of the SE tax on all your net earnings. How to file school taxes Special Rules and Exceptions Aliens. How to file school taxes   Generally, resident aliens must pay self-employment tax under the same rules that apply to U. How to file school taxes S. How to file school taxes citizens. How to file school taxes Nonresident aliens are not subject to SE tax unless an international social security agreement in effect determines that they are covered under the U. How to file school taxes S. How to file school taxes social security system. How to file school taxes 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. How to file school taxes S. How to file school taxes residents for self-employment tax purposes. How to file school taxes For more information on aliens, see Publication 519, U. How to file school taxes S. How to file school taxes Tax Guide for Aliens. How to file school taxes Child employed by parent. How to file school taxes   You are not subject to SE tax if you are under age 18 and you are working for your father or mother. How to file school taxes Church employee. How to file school taxes    If you work for a church or a qualified church-controlled organization (other than as a minister or member of a religious order) that elected an exemption from social security and Medicare taxes, you are subject to SE tax if you receive $108. How to file school taxes 28 or more in wages from the church or organization. How to file school taxes For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. How to file school taxes Fishing crew member. How to file school taxes   If you are a member of the crew on a boat that catches fish or other water life, your earnings are subject to SE tax if all the following conditions apply. How to file school taxes You do not get any pay for the work except your share of the catch or a share of the proceeds from the sale of the catch, unless the pay meets all the following conditions. How to file school taxes The pay is not more than $100 per trip. How to file school taxes The pay is received only if there is a minimum catch. How to file school taxes The pay is solely for additional duties (such as mate, engineer, or cook) for which additional cash pay is traditional in the fishing industry. How to file school taxes You get a share of the catch or a share of the proceeds from the sale of the catch. How to file school taxes Your share depends on the amount of the catch. How to file school taxes The boat's operating crew normally numbers fewer than 10 individuals. How to file school taxes (An operating crew is considered as normally made up of fewer than 10 if the average size of the crew on trips made during the last four calendar quarters is fewer than 10. How to file school taxes ) Notary public. How to file school taxes   Fees you receive for services you perform as a notary public are reported on Schedule C or C-EZ but are not subject to self-employment tax (see the Instructions for Schedule SE (Form 1040)). How to file school taxes State or local government employee. How to file school taxes   You are subject to SE tax if you are an employee of a state or local government, are paid solely on a fee basis, and your services are not covered under a federal-state social security agreement. How to file school taxes Foreign government or international organization employee. How to file school taxes   You are subject to SE tax if both the following conditions are true. How to file school taxes You are a U. How to file school taxes S. How to file school taxes citizen employed in the United States, Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, or the Virgin Islands by: A foreign government, A wholly-owned agency of a foreign government, or An international organization. How to file school taxes Your employer is not required to withhold social security and Medicare taxes from your wages. How to file school taxes U. How to file school taxes S. How to file school taxes citizen or resident alien residing abroad. How to file school taxes    If you are a self-employed U. How to file school taxes S. How to file school taxes citizen or resident alien living outside the United States, in most cases you must pay SE tax. How to file school taxes Do not reduce your foreign earnings from self-employment by your foreign earned income exclusion. How to file school taxes Exception. How to file school taxes    The United States has social security agreements with many countries to eliminate double taxation under two social security systems. How to file school taxes Under these agreements, you generally must only pay social security and Medicare taxes to the country in which you live. How to file school taxes The country to which you must pay the tax will issue a certificate which serves as proof of exemption from social security tax in the other country. How to file school taxes   For more information, see the Instructions for Schedule SE (Form 1040). How to file school taxes More Than One Business If you have earnings subject to SE tax from more than one trade, business, or profession, you must combine the net profit (or loss) from each to determine your total earnings subject to SE tax. How to file school taxes A loss from one business reduces your profit from another business. How to file school taxes Community Property Income If any of the income from a trade or business, other than a partnership, is community property income under state law, it is included in the earnings subject to SE tax of the spouse carrying on the trade or business. How to file school taxes Gain or Loss Do not include in earnings subject to SE tax a gain or loss from the disposition of property that is neither stock in trade nor held primarily for sale to customers. How to file school taxes It does not matter whether the disposition is a sale, exchange, or an involuntary conversion. How to file school taxes Lost Income Payments If you are self-employed and reduce or stop your business activities, any payment you receive from insurance or other sources for the lost business income is included in earnings subject to SE tax. How to file school taxes If you are not working when you receive the payment, it still relates to your business and is included in earnings subject to SE tax, even though your business is temporarily inactive. How to file school taxes Figuring Earnings Subject to SE Tax Methods for Figuring Net Earnings There are three ways to figure your net earnings from self-employment. How to file school taxes The regular method. How to file school taxes The nonfarm optional method. How to file school taxes The farm optional method. How to file school taxes You must use the regular method unless you are eligible to use one or both of the optional methods. How to file school taxes 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. How to file school taxes You want to receive credit for social security benefit coverage. How to file school taxes You incurred child or dependent care expenses for which you could claim a credit. How to file school taxes (An optional method may increase your earned income, which could increase your credit. How to file school taxes ) You are entitled to the earned income credit. How to file school taxes (An optional method may increase your earned income, which could increase your credit. How to file school taxes ) You are entitled to the additional child tax credit. How to file school taxes (An optional method may increase your earned income, which could increase your credit. How to file school taxes ) Effects of using an optional method. How to file school taxes   Using an optional method could increase your SE tax. How to file school taxes Paying more SE tax could result in your getting higher benefits when you retire. How to file school taxes   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 tax or no tax using the regular method. How to file school taxes   The optional methods may be used only to figure your SE tax. How to file school taxes To figure your income tax, include your actual earnings in gross income, regardless of which method you use to determine SE tax. How to file school taxes Regular Method Multiply your total earnings subject to SE tax by 92. How to file school taxes 35% (. How to file school taxes 9235) to get your net earnings under the regular method. How to file school taxes See Short Schedule SE, line 4, or Long Schedule SE, line 4a. How to file school taxes Net earnings figured using the regular method are also called actual net earnings. How to file school taxes Nonfarm Optional Method Use the nonfarm optional method only for earnings that do not come from farming. How to file school taxes You may use this method if you meet all the following tests. How to file school taxes You are self-employed on a regular basis. How to file school taxes This means that your actual net earnings from self-employment were $400 or more in at least 2 of the 3 tax years before the one for which you use this method. How to file school taxes The net earnings can be from either farm or nonfarm earnings or both. How to file school taxes You have used this method less than 5 years. How to file school taxes (There is a 5-year lifetime limit. How to file school taxes ) The years do not have to be one after another. How to file school taxes Your net nonfarm profits were: Less than $5,024, and Less than 72. How to file school taxes 189% of your gross nonfarm income. How to file school taxes Net nonfarm profits. How to file school taxes   Net nonfarm profit generally is the total of the amounts from: Line 31, Schedule C (Form 1040), Line 3, Schedule C-EZ (Form 1040), Box 14, code A, Schedule K-1 (Form 1065) (from nonfarm partnerships), and Box 9, code J1, Schedule K-1 (Form 1065-B). How to file school taxes   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. How to file school taxes Gross nonfarm income. How to file school taxes   Your gross nonfarm income generally is the total of the amounts from: Line 7, Schedule C (Form 1040), Line 1, Schedule C-EZ (Form 1040), Box 14, code C, Schedule K-1 (Form 1065) (from nonfarm partnerships), and Box 9, code J2, Schedule K-1 (Form 1065-B). How to file school taxes Figuring Nonfarm Net Earnings If you meet the three tests explained earlier, use the following table to figure your net earnings from self-employment under the nonfarm optional method. How to file school taxes Table 10-1. How to file school taxes Figuring Nonfarm Net Earnings IF your gross nonfarm income is. How to file school taxes . How to file school taxes . How to file school taxes THEN your net earnings are equal to. How to file school taxes . How to file school taxes . How to file school taxes $6,960 or less Two-thirds of your gross nonfarm income. How to file school taxes More than $6,960 $4,640 Actual net earnings. How to file school taxes   Your actual net earnings are 92. How to file school taxes 35% of your total earnings subject to SE tax (that is, multiply total earnings subject to SE tax by 92. How to file school taxes 35% (. How to file school taxes 9235) to get actual net earnings). How to file school taxes Actual net earnings are equivalent to net earnings figured using the regular method. How to file school taxes Optional net earnings less than actual net earnings. How to file school taxes   You cannot use this method to report an amount less than your actual net earnings from self-employment. How to file school taxes Gross nonfarm income of $6,960 or less. How to file school taxes   The following examples illustrate how to figure net earnings when gross nonfarm income is $6,960 or less. How to file school taxes Example 1. How to file school taxes Net nonfarm profit less than $5,024 and less than 72. How to file school taxes 189% of gross nonfarm income. How to file school taxes Ann Green runs a craft business. How to file school taxes Her actual net earnings from self-employment were $800 in 2011 and $900 in 2012. How to file school taxes She meets the test for being self-employed on a regular basis. How to file school taxes She has used the nonfarm optional method less than 5 years. How to file school taxes Her gross income and net profit in 2013 are as follows: Gross nonfarm income $5,400 Net nonfarm profit $1,200 Ann's actual net earnings for 2013 are $1,108 ($1,200 × . How to file school taxes 9235). How to file school taxes Because her net profit is less than $5,024 and less than 72. How to file school taxes 189% of her gross income, she can use the nonfarm optional method to figure net earnings of $3,600 (2/3 × $5,400). How to file school taxes Because these net earnings are higher than her actual net earnings, she can report net earnings of $3,600 for 2013. How to file school taxes Example 2. How to file school taxes Net nonfarm profit less than $5,024 but not less than 72. How to file school taxes 189% of gross nonfarm income. How to file school taxes Assume that in Example 1 Ann's gross income is $1,000 and her net profit is $800. How to file school taxes She must use the regular method to figure her net earnings. How to file school taxes She cannot use the nonfarm optional method because her net profit is not less than 72. How to file school taxes 189% of her gross income. How to file school taxes Example 3. How to file school taxes Net loss from a nonfarm business. How to file school taxes Assume that in Example 1 Ann has a net loss of $700. How to file school taxes She can use the nonfarm optional method and report $3,600 (2/3 × $5,400) as her net earnings. How to file school taxes Example 4. How to file school taxes Nonfarm net earnings less than $400. How to file school taxes Assume that in Example 1 Ann has gross income of $525 and a net profit of $175. How to file school taxes In this situation, she would not pay any SE tax under either the regular method or the nonfarm optional method because her net earnings under both methods are less than $400. How to file school taxes Gross nonfarm income of more than $6,960. How to file school taxes   The following examples illustrate how to figure net earnings when gross nonfarm income is more than $6,960. How to file school taxes Example 1. How to file school taxes Net nonfarm profit less than $5,024 and less than 72. How to file school taxes 189% of gross nonfarm income. How to file school taxes John White runs an appliance repair shop. How to file school taxes His actual net earnings from self-employment were $10,500 in 2011 and $9,500 in 2012. How to file school taxes He meets the test for being self-employed on a regular basis. How to file school taxes He has used the nonfarm optional method less than 5 years. How to file school taxes His gross income and net profit in 2013 are as follows: Gross nonfarm income $12,000 Net nonfarm profit $1,200 John's actual net earnings for 2013 are $1,108 ($1,200 × . How to file school taxes 9235). How to file school taxes Because his net profit is less than $5,024 and less than 72. How to file school taxes 189% of his gross income, he can use the nonfarm optional method to figure net earnings of $4,640. How to file school taxes Because these net earnings are higher than his actual net earnings, he can report net earnings of $4,640 for 2013. How to file school taxes Example 2. How to file school taxes Net nonfarm profit not less than $5,024. How to file school taxes Assume that in Example 1 John's net profit is $5,400. How to file school taxes He must use the regular method. How to file school taxes He cannot use the nonfarm optional method because his net nonfarm profit is not less than $5,024. How to file school taxes Example 3. How to file school taxes Net loss from a nonfarm business. How to file school taxes Assume that in Example 1 John has a net loss of $700. How to file school taxes He can use the nonfarm optional method and report $4,640 as his net earnings from self-employment. How to file school taxes Farm Optional Method Use the farm optional method only for earnings from a farming business. How to file school taxes See Publication 225 for information about this method. How to file school taxes Using Both Optional Methods If you have both farm and nonfarm earnings, you may be able to use both optional methods to determine your net earnings from self-employment. How to file school taxes To figure your net earnings using both optional methods, you must: Figure your farm and nonfarm net earnings separately under each method. How to file school taxes Do not combine farm earnings with nonfarm earnings to figure your net earnings under either method. How to file school taxes Add the net earnings figured under each method to arrive at your total net earnings from self-employment. How to file school taxes You can report less than your total actual farm and nonfarm net earnings but not less than actual nonfarm net earnings. How to file school taxes If you use both optional methods, you can report no more than $4,640 as your combined net earnings from self-employment. How to file school taxes Example. How to file school taxes You are a self-employed farmer. How to file school taxes You also operate a retail grocery store. How to file school taxes Your gross income, actual net earnings from self-employment, and optional farm and optional nonfarm net earnings from self-employment are shown in Table 10-2. How to file school taxes Table 10-2. How to file school taxes Example—Farm and Nonfarm Earnings Income and Earnings Farm Nonfarm Gross income $3,000 $6,000 Actual net earnings $900 $500 Optional net earnings (2/3 of gross income) $2,000 $4,000 Table 10-3 shows four methods or combinations of methods you can use to figure net earnings from self-employment using the farm and nonfarm gross income and actual net earnings shown in Table 10-2. How to file school taxes Method 1. How to file school taxes Using the regular method for both farm and nonfarm income. How to file school taxes Method 2. How to file school taxes Using the optional method for farm income and the regular method for nonfarm income. How to file school taxes Method 3. How to file school taxes Using the regular method for farm income and the optional method for nonfarm income. How to file school taxes Method 4. How to file school taxes Using the optional method for both farm and nonfarm income. How to file school taxes Note. How to file school taxes Actual net earnings is the same as net earnings figured using the regular method. How to file school taxes Table 10-3. How to file school taxes Example—Net Earnings Net Earnings 1 2 3 4 Actual  farm $ 900   $ 900   Optional  farm   $ 2,000   $ 2,000 Actual nonfarm $ 500 $ 500     Optional nonfarm     $4,000 $4,000 Amount you can report: $1,400 $2,500 $4,900 $4,640* *Limited to $4,640 because you used both optional methods. How to file school taxes Fiscal Year Filer If you use a tax year other than the calendar year, you must use the tax rate and maximum earnings limit in effect at the beginning of your tax year. How to file school taxes Even if the tax rate or maximum earnings limit changes during your tax year, continue to use the same rate and limit throughout your tax year. How to file school taxes Reporting Self-Employment Tax Use Schedule SE (Form 1040) to figure and report your SE tax. How to file school taxes Then enter the SE tax on line 56 of Form 1040 and attach Schedule SE to Form 1040. How to file school taxes Most taxpayers can use Section A—Short Schedule SE to figure their SE tax. How to file school taxes However, certain taxpayers must use Section B—Long Schedule SE. How to file school taxes 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. How to file school taxes Joint return. How to file school taxes   Even if you file a joint return, you cannot file a joint Schedule SE. How to file school taxes This is true whether one spouse or both spouses have earnings subject to SE tax. How to file school taxes If both of you have earnings subject to SE tax, each of you must complete a separate Schedule SE. How to file school taxes 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. How to file school taxes Attach both schedules to the joint return. How to file school taxes More than one business. How to file school taxes   If you have more than one trade or business, you must combine the net profit (or loss) from each business to figure your SE tax. How to file school taxes A loss from one business will reduce your profit from another business. How to file school taxes File one Schedule SE showing the earnings from self-employment, but file a separate Schedule C, C-EZ, or F for each business. How to file school taxes Example. How to file school taxes You are the sole proprietor of two separate businesses. How to file school taxes You operate a restaurant that made a net profit of $25,000. How to file school taxes You also have a cabinetmaking business that had a net loss of $500. How to file school taxes You must file a Schedule C for the restaurant showing your net profit of $25,000 and another Schedule C for the cabinetmaking business showing your net loss of $500. How to file school taxes You file Schedule SE showing total earnings subject to SE tax of $24,500. How to file school taxes Prev  Up  Next   Home   More Online Publications