File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

How To File Self Employment Taxes

Tax Calculator 20121040 Ez Instructions1040 Ez Tax Form 20112010 Tax TablesHow Do You Amend Your TaxesH&r Block E FileFree Website For Filing State TaxesNj 1040nrHow To Fill Out 1040xHow Do You Amend Your TaxesFree Tax PreparationTaxslayer Website1040 Ez 2011Www Myfreetaxes Com Unitedwayhoco OrgFree Tax File2013 Ohio 1040ez Instructions2011 E File1040eztaxform1040 Ez 20131040nr Instructions 2012How To Amend TaxFiling Taxes StudentFile Free Tax ReturnIrs 1040ez Form2013 State Tax ReturnHow To File Amended Tax Return TurbotaxIrs Tax Forms For 2009Volunteer Income Tax Assistance ProgramIrs Tax Tables 1040ezForm 4868Turbo Tax EzHow To File An Amended Tax ReturnIrs Tax Forms 2011Efile Tax ReturnFree 2011 Tax Return1040ezformE-file State Taxes OnlyHelp Back TaxesFile Taxes Online For Free2007 Taxes Online

How To File Self Employment Taxes

How to file self employment taxes Publication 1544 - Introductory Material Table of Contents What's New Introduction What's New Future developments. How to file self employment taxes  For the latest information about developments related to Publication 1544, such as legislation enacted after it was published, go to www. How to file self employment taxes irs. How to file self employment taxes gov/pub1544. How to file self employment taxes Amending a report. How to file self employment taxes  You can amend a prior report by checking box 1a at the top of Form 8300. How to file self employment taxes See Amending a report, later. How to file self employment taxes Introduction If, in a 12-month period, you receive more than $10,000 in cash from one buyer as a result of a transaction in your trade or business, you must report it to the Internal Revenue Service (IRS) and the Financial Crimes Enforcement Network (FinCEN) on Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business. How to file self employment taxes This publication explains why, when, and where to report these cash payments. How to file self employment taxes It also discusses the substantial penalties for not reporting them. How to file self employment taxes Some organizations do not have to file Form 8300, including financial institutions who must file FinCEN Form 104 (formerly Form 4789), Currency Transaction Report, and casinos who must file FinCEN Form 103 (formerly Form 8362), Currency Transaction Report by Casinos. How to file self employment taxes They are not discussed in this publication. How to file self employment taxes This publication explains key issues and terms related to Form 8300. How to file self employment taxes You should also read the instructions attached to the form. How to file self employment taxes They explain what to enter on each line. How to file self employment taxes Prev  Up  Next   Home   More Online Publications

Topic 303 - Checklist of Common Errors When Preparing Your Tax Return

Before filing your return, review it to make sure it is correct and complete. The following checklist may help you to avoid common errors:

  • Did you consider filing your tax return electronically? By electronically filing your tax return, many common errors may be avoided or corrected by the computer software. Depending on your income, you may even qualify to e-file for free by using Free File tax software. For more information, visit the IRS website at www.irs.gov and click on the e-file logo on our home page.
  • Did you clearly print your name, social security number, and address, including ZIP code directly on your return? Note that if you are married but filing a separate return, do not include your spouse's name in the name, address and social security number fields on the return.
  • Did you enter the names and social security numbers for yourself, your spouse (if filing jointly), your dependents, and qualifying children for the earned income credit or child tax credit, exactly as those names and numbers appear on each person's social security card? If there have been any name changes be sure to contact the Social Security Administration at www.ssa.gov or call at 800-772-1213.
  • Did you check only one filing status?
  • Did you check the appropriate exemption boxes and enter the names and social security numbers exactly as those names and numbers appear on each person's social security card, for all dependents you claimed? Is the total number of exemptions entered?
  • Did you enter income, deductions, and credits on the correct lines and are the totals correct?
  • If you show a negative amount on your return, did you put brackets around it?
  • If you are taking the standard deduction and checked any box indicating either you or your spouse were age 65 or older or blind, did you find the correct standard deduction using the chart in the Form 1040 Instructions (PDF) or the Form 1040A Instructions (PDF)?
  • Did you figure the tax correctly? If you used the tax tables, did you use the correct column for your filing status?
  • Did you sign and date the return? If it is a joint return, did your spouse also sign and date the return?
  • Do you have a Form W-2 (PDF) from each of your employers and did you attach Copy B of each Form W-2 to your return? If you have more than one job, combine the wages and withholdings from all Form W-2s you receive and report those amounts on one return.
  • Did you attach each Form 1099-R (PDF) that shows federal tax was withheld?
  • Did you attach all other necessary schedules and forms in sequence number order as shown in the upper right-hand corner?
  • Did you use the correct mailing address from your tax form instructions?
  • Did you use a postage stamp on the envelope?
  • If you owe tax, did you enclose a check or money order made payable to the "United States Treasury" with the return and include your name, address, social security number, daytime telephone number, tax form, and tax year on the payment? For additional information, refer to Topic 158.
  • If you are due a refund and requested direct deposit, did you check your financial institution's routing and account numbers?
  • Did you make a copy of the signed return and all schedules for your records?

A few of the most common errors are:

  1. Incorrect or missing social security numbers.
  2. Incorrect tax entered based on taxable income and filing status.
  3. Computation errors in figuring the taxable income, withholding and estimated tax payments, earned income credit, standard deduction for age 65 or over or blind, the taxable amount of social security benefits, and child and dependent care credit. Also, missing or incorrect identification numbers for child care providers.
  4. Withholding and estimated tax payments entered on the wrong line.
  5. Math errors, both addition and subtraction.

It is important that you review your entire return because any errors may delay the processing of your return.

Page Last Reviewed or Updated: January 22, 2014

The How To File Self Employment Taxes

How to file self employment taxes 5. How to file self employment taxes   Business Income Table of Contents Introduction Kinds of IncomeBartering for Property or Services Real Estate Rents Personal Property Rents Interest and Dividend Income Canceled Debt Other Income Items That Are Not IncomeAmount you can exclude. How to file self employment taxes Short-term lease. How to file self employment taxes Retail space. How to file self employment taxes Qualified long-term real property. How to file self employment taxes Guidelines for Selected Occupations Accounting for Your Income Introduction This chapter primarily explains business income and how to account for it on your tax return, what items are not considered income, and gives guidelines for selected occupations. How to file self employment taxes If there is a connection between any income you receive and your business, the income is business income. How to file self employment taxes A connection exists if it is clear that the payment of income would not have been made if you did not have the business. How to file self employment taxes You can have business income even if you are not involved in the activity on a regular full-time basis. How to file self employment taxes Income from work you do on the side in addition to your regular job can be business income. How to file self employment taxes You report most business income, such as income from selling your products or services, on Schedule C or C-EZ. How to file self employment taxes But you report the income from the sale of business assets, such as land and office buildings, on other forms instead of Schedule C or C-EZ. How to file self employment taxes For information on selling business assets, see chapter 3. How to file self employment taxes Nonemployee compensation. How to file self employment taxes Business income includes amounts you received in your business that were properly shown on Forms 1099-MISC. How to file self employment taxes This includes amounts reported as nonemployee compensation in box 7 of the form. How to file self employment taxes You can find more information in the instructions on the back of the Form 1099-MISC you received. How to file self employment taxes Kinds of Income You must report on your tax return all income you receive from your business unless it is excluded by law. How to file self employment taxes In most cases, your business income will be in the form of cash, checks, and credit card charges. How to file self employment taxes But business income can be in other forms, such as property or services. How to file self employment taxes These and other types of income are explained next. How to file self employment taxes If you are a U. How to file self employment taxes S. How to file self employment taxes citizen who has business income from sources outside the United States (foreign income), you must report that income on your tax return unless it is exempt from tax under U. How to file self employment taxes S. How to file self employment taxes law. How to file self employment taxes If you live outside the United States, you may be able to exclude part or all of your foreign-source business income. How to file self employment taxes For details, see Publication 54, Tax Guide for U. How to file self employment taxes S. How to file self employment taxes Citizens and Resident Aliens Abroad. How to file self employment taxes Bartering for Property or Services Bartering is an exchange of property or services. How to file self employment taxes You must include in your gross receipts, at the time received, the fair market value of property or services you receive in exchange for something else. How to file self employment taxes If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as the fair market value unless the value can be shown to be otherwise. How to file self employment taxes Example 1. How to file self employment taxes You are a self-employed lawyer. How to file self employment taxes You perform legal services for a client, a small corporation. How to file self employment taxes In payment for your services, you receive shares of stock in the corporation. How to file self employment taxes You must include the fair market value of the shares in income. How to file self employment taxes Example 2. How to file self employment taxes You are an artist and create a work of art to compensate your landlord for the rent-free use of your apartment. How to file self employment taxes You must include the fair rental value of the apartment in your gross receipts. How to file self employment taxes Your landlord must include the fair market value of the work of art in his or her rental income. How to file self employment taxes Example 3. How to file self employment taxes You are a self-employed accountant. How to file self employment taxes Both you and a house painter are members of a barter club, an organization that each year gives its members a directory of members and the services each member provides. How to file self employment taxes Members get in touch with other members directly and bargain for the value of the services to be performed. How to file self employment taxes In return for accounting services you provided for the house painter's business, the house painter painted your home. How to file self employment taxes You must include in gross receipts the fair market value of the services you received from the house painter. How to file self employment taxes The house painter must include the fair market value of your accounting services in his or her gross receipts. How to file self employment taxes Example 4. How to file self employment taxes You are a member of a barter club that uses credit units to credit or debit members' accounts for goods or services provided or received. How to file self employment taxes As soon as units are credited to your account, you can use them to buy goods or services or sell or transfer the units to other members. How to file self employment taxes You must include the value of credit units you received in your gross receipts for the tax year in which the units are credited to your account. How to file self employment taxes The dollar value of units received for services by an employee of the club, who can use the units in the same manner as other members, must be included in the employee's gross income for the tax year in which received. How to file self employment taxes It is wages subject to social security and Medicare taxes (FICA), federal unemployment taxes (FUTA), and income tax withholding. How to file self employment taxes See Publication 15 (Circular E), Employer's Tax Guide. How to file self employment taxes Example 5. How to file self employment taxes You operate a plumbing business and use the cash method of accounting. How to file self employment taxes You join a barter club and agree to provide plumbing services to any member for a specified number of hours. How to file self employment taxes Each member has access to a directory that lists the members of the club and the services available. How to file self employment taxes Members contact each other directly and request services to be performed. How to file self employment taxes You are not required to provide services unless requested by another member, but you can use as many of the offered services as you wish without paying a fee. How to file self employment taxes You must include the fair market value of any services you receive from club members in your gross receipts when you receive them even if you have not provided any services to club members. How to file self employment taxes Information returns. How to file self employment taxes   If you are involved in a bartering transaction, you may have to file either of the following forms. How to file self employment taxes Form 1099-B, Proceeds From Broker and Barter Exchange Transactions. How to file self employment taxes Form 1099-MISC, Miscellaneous Income. How to file self employment taxes For information about these forms, see the General Instructions for Certain Information Returns. How to file self employment taxes Real Estate Rents If you are a real estate dealer who receives income from renting real property or an owner of a hotel, motel, etc. How to file self employment taxes , who provides services (maid services, etc. How to file self employment taxes ) for guests, report the rental income and expenses on Schedule C or C-EZ. How to file self employment taxes If you are not a real estate dealer or the kind of owner described in the preceding sentence, report the rental income and expenses on Schedule E. How to file self employment taxes For more information, see Publication 527, Residential Rental Property (Including Rental of Vacation Homes). How to file self employment taxes Real estate dealer. How to file self employment taxes   You are a real estate dealer if you are engaged in the business of selling real estate to customers with the purpose of making a profit from those sales. How to file self employment taxes Rent you receive from real estate held for sale to customers is subject to SE tax. How to file self employment taxes However, rent you receive from real estate held for speculation or investment is not subject to SE tax. How to file self employment taxes Trailer park owner. How to file self employment taxes   Rental income from a trailer park is subject to SE tax if you are a self-employed trailer park owner who provides trailer lots and facilities and substantial services for the convenience of your tenants. How to file self employment taxes    You generally are considered to provide substantial services for tenants if they are primarily for the tenants' convenience and normally are not provided to maintain the lots in a condition for occupancy. How to file self employment taxes Services are substantial if the compensation for the services makes up a material part of the tenants' rental payments. How to file self employment taxes   Examples of services that are not normally provided for the tenants' convenience include supervising and maintaining a recreational hall provided by the park, distributing a monthly newsletter to tenants, operating a laundry facility, and helping tenants buy or sell their trailers. How to file self employment taxes   Examples of services that are normally provided to maintain the lots in a condition for tenant occupancy include city sewerage, electrical connections, and roadways. How to file self employment taxes Hotels, boarding houses, and apartments. How to file self employment taxes   Rental income you receive for the use or occupancy of hotels, boarding houses, or apartment houses is subject to SE tax if you provide services for the occupants. How to file self employment taxes   Generally, you are considered to provide services for the occupants if the services are primarily for their convenience and are not services normally provided with the rental of rooms for occupancy only. How to file self employment taxes An example of a service that is not normally provided for the convenience of the occupants is maid service. How to file self employment taxes However, providing heat and light, cleaning stairways and lobbies, and collecting trash are services normally provided for the occupants' convenience. How to file self employment taxes Prepaid rent. How to file self employment taxes   Advance payments received under a lease that does not put any restriction on their use or enjoyment are income in the year you receive them. How to file self employment taxes This is true no matter what accounting method or period you use. How to file self employment taxes Lease bonus. How to file self employment taxes   A bonus you receive from a lessee for granting a lease is an addition to the rent. How to file self employment taxes Include it in your gross receipts in the year received. How to file self employment taxes Lease cancellation payments. How to file self employment taxes   Report payments you receive from your lessee for canceling a lease in your gross receipts in the year received. How to file self employment taxes Payments to third parties. How to file self employment taxes   If your lessee makes payments to someone else under an agreement to pay your debts or obligations, include the payments in your gross receipts when the lessee makes the payments. How to file self employment taxes A common example of this kind of income is a lessee's payment of your property taxes on leased real property. How to file self employment taxes Settlement payments. How to file self employment taxes   Payments you receive in settlement of a lessee's obligation to restore the leased property to its original condition are income in the amount that the payments exceed the adjusted basis of the leasehold improvements destroyed, damaged, removed, or disconnected by the lessee. How to file self employment taxes Personal Property Rents If you are in the business of renting personal property (equipment, vehicles, formal wear, etc. How to file self employment taxes ), include the rental amount you receive in your gross receipts on Schedule C or C-EZ. How to file self employment taxes Prepaid rent and other payments described in the preceding Real Estate Rents discussion can also be received for renting personal property. How to file self employment taxes If you receive any of those payments, include them in your gross receipts as explained in that discussion. How to file self employment taxes Interest and Dividend Income Interest and dividends may be considered business income. How to file self employment taxes Interest. How to file self employment taxes   Interest received on notes receivable that you have accepted in the ordinary course of business is business income. How to file self employment taxes Interest received on loans is business income if you are in the business of lending money. How to file self employment taxes Uncollectible loans. How to file self employment taxes   If a loan payable to you becomes uncollectible during the tax year and you use an accrual method of accounting, you must include in gross income interest accrued up to the time the loan became uncollectible. How to file self employment taxes If the accrued interest later becomes uncollectible, you may be able to take a bad debt deduction. How to file self employment taxes See Bad Debts in chapter 8. How to file self employment taxes Unstated interest. How to file self employment taxes   If little or no interest is charged on an installment sale, you may have to treat a part of each payment as unstated interest. How to file self employment taxes See Unstated Interest and Original Issue Discount (OID) in Publication 537, Installment Sales. How to file self employment taxes Dividends. How to file self employment taxes   Generally, dividends are business income to dealers in securities. How to file self employment taxes For most sole proprietors and statutory employees, however, dividends are nonbusiness income. How to file self employment taxes If you hold stock as a personal investment separately from your business activity, the dividends from the stock are nonbusiness income. How to file self employment taxes   If you receive dividends from business insurance premiums you deducted in an earlier year, you must report all or part of the dividend as business income on your return. How to file self employment taxes To find out how much you have to report, see   Recovery of items previously deducted under Other Income, later. How to file self employment taxes Canceled Debt The following explains the general rule for including canceled debt in income and the exceptions to the general rule. How to file self employment taxes General Rule Generally, if your debt is canceled or forgiven, other than as a gift or bequest to you, you must include the canceled amount in your gross income for tax purposes. How to file self employment taxes Report the canceled amount on line 6 of Schedule C if you incurred the debt in your business. How to file self employment taxes If the debt is a nonbusiness debt, report the canceled amount on line 21 of Form 1040. How to file self employment taxes Exceptions The following discussion covers some exceptions to the general rule for canceled debt. How to file self employment taxes Price reduced after purchase. How to file self employment taxes   If you owe a debt to the seller for property you bought and the seller reduces the amount you owe, you generally do not have income from the reduction. How to file self employment taxes Unless you are bankrupt or insolvent, treat the amount of the reduction as a purchase price adjustment and reduce your basis in the property. How to file self employment taxes Deductible debt. How to file self employment taxes   You do not realize income from a canceled debt to the extent the payment of the debt would have led to a deduction. How to file self employment taxes Example. How to file self employment taxes You get accounting services for your business on credit. How to file self employment taxes Later, you have trouble paying your business debts, but you are not bankrupt or insolvent. How to file self employment taxes Your accountant forgives part of the amount you owe for the accounting services. How to file self employment taxes How you treat the canceled debt depends on your method of accounting. How to file self employment taxes Cash method — You do not include the canceled debt in income because payment of the debt would have been deductible as a business expense. How to file self employment taxes Accrual method — You include the canceled debt in income because the expense was deductible when you incurred the debt. How to file self employment taxes   For information on the cash and accrual methods of accounting, see chapter 2. How to file self employment taxes Exclusions Do not include canceled debt in income in the following situations. How to file self employment taxes However, you may be required to file Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. How to file self employment taxes For more information, see Form 982. How to file self employment taxes The cancellation takes place in a bankruptcy case under title 11 of the U. How to file self employment taxes S. How to file self employment taxes Code (relating to bankruptcy). How to file self employment taxes See Publication 908, Bankruptcy Tax Guide. How to file self employment taxes The cancellation takes place when you are insolvent. How to file self employment taxes You can exclude the canceled debt to the extent you are insolvent. How to file self employment taxes See Publication 908. How to file self employment taxes The canceled debt is a qualified farm debt owed to a qualified person. How to file self employment taxes See chapter 3 in Publication 225, Farmer's Tax Guide. How to file self employment taxes The canceled debt is a qualified real property business debt. How to file self employment taxes This situation is explained later. How to file self employment taxes The canceled debt is qualified principal residence indebtedness which is discharged after 2006. How to file self employment taxes See Form 982. How to file self employment taxes If a canceled debt is excluded from income because it takes place in a bankruptcy case, the exclusions in situations 2 through 5 do not apply. How to file self employment taxes If it takes place when you are insolvent, the exclusions in situations 3 and 4 do not apply to the extent you are insolvent. How to file self employment taxes Debt. How to file self employment taxes   For purposes of this discussion, debt includes any debt for which you are liable or which attaches to property you hold. How to file self employment taxes Qualified real property business debt. How to file self employment taxes   You can elect to exclude (up to certain limits) the cancellation of qualified real property business debt. How to file self employment taxes If you make the election, you must reduce the basis of your depreciable real property by the amount excluded. How to file self employment taxes Make this reduction at the beginning of your tax year following the tax year in which the cancellation occurs. How to file self employment taxes However, if you dispose of the property before that time, you must reduce its basis immediately before the disposition. How to file self employment taxes Cancellation of qualified real property business debt. How to file self employment taxes   Qualified real property business debt is debt (other than qualified farm debt) that meets all the following conditions. How to file self employment taxes It was incurred or assumed in connection with real property used in a trade or business. How to file self employment taxes It was secured by such real property. How to file self employment taxes It was incurred or assumed at either of the following times. How to file self employment taxes Before January 1, 1993. How to file self employment taxes After December 31, 1992, if incurred or assumed to acquire, construct, or substantially improve the real property. How to file self employment taxes It is debt to which you choose to apply these rules. How to file self employment taxes   Qualified real property business debt includes refinancing of debt described in (3) earlier, but only to the extent it does not exceed the debt being refinanced. How to file self employment taxes   You cannot exclude more than either of the following amounts. How to file self employment taxes The excess (if any) of: The outstanding principal of qualified real property business debt (immediately before the cancellation), over The fair market value (immediately before the cancellation) of the business real property that is security for the debt, reduced by the outstanding principal amount of any other qualified real property business debt secured by this property immediately before the cancellation. How to file self employment taxes The total adjusted bases of depreciable real property held by you immediately before the cancellation. How to file self employment taxes These adjusted bases are determined after any basis reduction due to a cancellation in bankruptcy, insolvency, or of qualified farm debt. How to file self employment taxes Do not take into account depreciable real property acquired in contemplation of the cancellation. How to file self employment taxes Election. How to file self employment taxes   To make this election, complete Form 982 and attach it to your income tax return for the tax year in which the cancellation occurs. How to file self employment taxes You must file your return by the due date (including extensions). How to file self employment taxes If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). How to file self employment taxes For more information, see When To File in the form instructions. How to file self employment taxes Other Income The following discussion explains how to treat other types of business income you may receive. How to file self employment taxes Restricted property. How to file self employment taxes   Restricted property is property that has certain restrictions that affect its value. How to file self employment taxes If you receive restricted stock or other property for services performed, the fair market value of the property in excess of your cost is included in your income on Schedule C or C-EZ when the restriction is lifted. How to file self employment taxes However, you can choose to be taxed in the year you receive the property. How to file self employment taxes For more information on including restricted property in income, see Publication 525, Taxable and Nontaxable Income. How to file self employment taxes Gains and losses. How to file self employment taxes   Do not report on Schedule C or C-EZ 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 self employment taxes Instead, you must report these gains and losses on other forms. How to file self employment taxes For more information, see chapter 3. How to file self employment taxes Promissory notes. How to file self employment taxes   Report promissory notes and other evidences of debt issued to you in a sale or exchange of property that is stock in trade or held primarily for sale to customers on Schedule C or C-EZ. How to file self employment taxes In general, you report them at their stated principal amount (minus any unstated interest) when you receive them. How to file self employment taxes Lost income payments. How to file self employment taxes   If you reduce or stop your business activities, report on Schedule C or C-EZ any payment you receive for the lost income of your business from insurance or other sources. How to file self employment taxes Report it on Schedule C or C-EZ even if your business is inactive when you receive the payment. How to file self employment taxes Damages. How to file self employment taxes   You must include in gross income compensation you receive during the tax year as a result of any of the following injuries connected with your business. How to file self employment taxes Patent infringement. How to file self employment taxes Breach of contract or fiduciary duty. How to file self employment taxes Antitrust injury. How to file self employment taxes Economic injury. How to file self employment taxes   You may be entitled to a deduction against the income if it compensates you for actual economic injury. How to file self employment taxes Your deduction is the smaller of the following amounts. How to file self employment taxes The amount you receive or accrue for damages in the tax year reduced by the amount you pay or incur in the tax year to recover that amount. How to file self employment taxes Your loss from the injury that you have not yet deducted. How to file self employment taxes Punitive damages. How to file self employment taxes   You must also include punitive damages in income. How to file self employment taxes Kickbacks. How to file self employment taxes   If you receive any kickbacks, include them in your income on Schedule C or C-EZ. How to file self employment taxes However, do not include them if you properly treat them as a reduction of a related expense item, a capital expenditure, or cost of goods sold. How to file self employment taxes Recovery of items previously deducted. How to file self employment taxes   If you recover a bad debt or any other item deducted in a previous year, include the recovery in income on Schedule C or C-EZ. How to file self employment taxes However, if all or part of the deduction in earlier years did not reduce your tax, you can exclude the part that did not reduce your tax. How to file self employment taxes If you exclude part of the recovery from income, you must include with your return a computation showing how you figured the exclusion. How to file self employment taxes Example. How to file self employment taxes Joe Smith, a sole proprietor, had gross income of $8,000, a bad debt deduction of $300, and other allowable deductions of $7,700. How to file self employment taxes He also had 2 personal exemptions for a total of $7,800. How to file self employment taxes He would not pay income tax even if he did not deduct the bad debt. How to file self employment taxes Therefore, he will not report as income any part of the $300 he may recover in any future year. How to file self employment taxes Exception for depreciation. How to file self employment taxes   This rule does not apply to depreciation. How to file self employment taxes You recover depreciation using the rules explained next. How to file self employment taxes Recapture of depreciation. How to file self employment taxes   In the following situations, you have to recapture the depreciation deduction. How to file self employment taxes This means you include in income part or all of the depreciation you deducted in previous years. How to file self employment taxes Listed property. How to file self employment taxes   If your business use of listed property (explained in chapter 8 under Depreciation ) falls to 50% or less in a tax year after the tax year you placed the property in service, you may have to recapture part of the depreciation deduction. How to file self employment taxes You do this by including in income on Schedule C part of the depreciation you deducted in previous years. How to file self employment taxes Use Part IV of Form 4797, Sales of Business Property, to figure the amount to include on Schedule C. How to file self employment taxes For more information, see What is the Business-Use Requirement? in chapter 5 of Publication 946, How To Depreciate Property. How to file self employment taxes That chapter explains how to determine whether property is used more than 50% in your business. How to file self employment taxes Section 179 property. How to file self employment taxes   If you take a section 179 deduction (explained in chapter 8 under Depreciation ) for an asset and before the end of the asset's recovery period the percentage of business use drops to 50% or less, you must recapture part of the section 179 deduction. How to file self employment taxes You do this by including in income on Schedule C part of the deduction you took. How to file self employment taxes Use Part IV of Form 4797 to figure the amount to include on Schedule C. How to file self employment taxes See chapter 2 in Publication 946 to find out when you recapture the deduction. How to file self employment taxes Sale or exchange of depreciable property. How to file self employment taxes   If you sell or exchange depreciable property at a gain, you may have to treat all or part of the gain due to depreciation as ordinary income. How to file self employment taxes You figure the income due to depreciation recapture in Part III of Form 4797. How to file self employment taxes For more information, see chapter 4 in Publication 544, Sales and Other Dispositions of Assets. How to file self employment taxes Items That Are Not Income In some cases the property or money you receive is not income. How to file self employment taxes Appreciation. How to file self employment taxes   Increases in value of your property are not income until you realize the increases through a sale or other taxable disposition. How to file self employment taxes Consignments. How to file self employment taxes   Consignments of merchandise to others to sell for you are not sales. How to file self employment taxes The title of merchandise remains with you, the consignor, even after the consignee possesses the merchandise. How to file self employment taxes Therefore, if you ship goods on consignment, you have no profit or loss until the consignee sells the merchandise. How to file self employment taxes Merchandise you have shipped out on consignment is included in your inventory until it is sold. How to file self employment taxes   Do not include merchandise you receive on consignment in your inventory. How to file self employment taxes Include your profit or commission on merchandise consigned to you in your income when you sell the merchandise or when you receive your profit or commission, depending upon the method of accounting you use. How to file self employment taxes Construction allowances. How to file self employment taxes   If you enter into a lease after August 5, 1997, you can exclude from income the construction allowance you receive (in cash or as a rent reduction) from your landlord if you receive it under both the following conditions. How to file self employment taxes Under a short-term lease of retail space. How to file self employment taxes For the purpose of constructing or improving qualified long-term real property for use in your business at that retail space. How to file self employment taxes Amount you can exclude. How to file self employment taxes   You can exclude the construction allowance to the extent it does not exceed the amount you spent for construction or improvements. How to file self employment taxes Short-term lease. How to file self employment taxes   A short-term lease is a lease (or other agreement for occupancy or use) of retail space for 15 years or less. How to file self employment taxes The following rules apply in determining whether the lease is for 15 years or less. How to file self employment taxes Take into account options to renew when figuring whether the lease is for 15 years or less. How to file self employment taxes But do not take into account any option to renew at fair market value determined at the time of renewal. How to file self employment taxes Two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar retail space are treated as one lease. How to file self employment taxes Retail space. How to file self employment taxes   Retail space is real property leased, occupied, or otherwise used by you as a tenant in your business of selling tangible personal property or services to the general public. How to file self employment taxes Qualified long-term real property. How to file self employment taxes   Qualified long-term real property is nonresidential real property that is part of, or otherwise present at, your retail space and that reverts to the landlord when the lease ends. How to file self employment taxes Exchange of like-kind property. How to file self employment taxes   If you exchange your business property or property you hold for investment solely for property of a like kind to be used in your business or to be held for investment, no gain or loss is recognized. How to file self employment taxes This means that the gain is not taxable and the loss is not deductible. How to file self employment taxes A common type of nontaxable exchange is the trade-in of a business automobile for another business automobile. How to file self employment taxes For more information, see Form 8824. How to file self employment taxes Leasehold improvements. How to file self employment taxes   If a tenant erects buildings or makes improvements to your property, the increase in the value of the property due to the improvements is not income to you. How to file self employment taxes However, if the facts indicate that the improvements are a payment of rent to you, then the increase in value would be income. How to file self employment taxes Loans. How to file self employment taxes   Money borrowed through a bona fide loan is not income. How to file self employment taxes Sales tax. How to file self employment taxes   State and local sales taxes imposed on the buyer, which you were required to collect and pay over to state or local governments, are not income. How to file self employment taxes Guidelines for Selected Occupations This section provides information to determine whether your earnings should be reported on Schedule C (Form 1040) or C-EZ (Form 1040). How to file self employment taxes Direct seller. How to file self employment taxes   You must report all income you receive as a direct seller on Schedule C or C-EZ. How to file self employment taxes This includes any of the following. How to file self employment taxes Income from sales—payments you receive from customers for products they buy from you. How to file self employment taxes Commissions, bonuses, or percentages you receive for sales and the sales of others who work under you. How to file self employment taxes Prizes, awards, and gifts you receive from your selling business. How to file self employment taxes You must report this income regardless of whether it is reported to you on an information return. How to file self employment taxes   You are a direct seller if you meet all the following conditions. How to file self employment taxes You are engaged in one of the following trades or businesses. How to file self employment taxes Selling or soliciting the sale of consumer products either in a home or other place that is not a permanent retail establishment, or to any buyer on a buy-sell basis or a deposit-commission basis for resale in a home or other place of business that is not a permanent retail establishment. How to file self employment taxes Delivering or distributing newspapers or shopping news (including any services directly related to that trade or business). How to file self employment taxes Substantially all your pay (whether paid in cash or not) for services described above is directly related to sales or other output (including performance of services) rather than to the number of hours worked. How to file self employment taxes Your services are performed under a written contract between you and the person for whom you perform the services, and the contract provides that you will not be treated as an employee for federal tax purposes. How to file self employment taxes Executor or administrator. How to file self employment taxes   If you administer a deceased person's estate, your fees are reported on Schedule C or C-EZ if you are one of the following: A professional fiduciary. How to file self employment taxes A nonprofessional fiduciary (personal representative) and both of the following apply. How to file self employment taxes The estate includes an active trade or business in which you actively participate. How to file self employment taxes Your fees are related to the operation of that trade or business. How to file self employment taxes A nonprofessional fiduciary of a single estate that requires extensive managerial activities on your part for a long period of time, provided these activities are enough to be considered a trade or business. How to file self employment taxes    If the fees do not meet the above requirements, report them on line 21 of Form 1040. How to file self employment taxes Fishing crew member. How to file self employment taxes    If you are a member of the crew that catches fish or other water life, your earnings are reported on Schedule C or C-EZ if you meet all the requirements shown in chapter 10 under Fishing crew member . How to file self employment taxes Insurance agent, former. How to file self employment taxes   Termination payments you receive as a former self-employed insurance agent from an insurance company because of services you performed for that company are not reported on Schedule C or C-EZ if all the following conditions are met. How to file self employment taxes You received payments after your agreement to perform services for the company ended. How to file self employment taxes You did not perform any services for the company after your service agreement ended and before the end of the year in which you received the payment. How to file self employment taxes You entered into a covenant not to compete against the company for at least a 1-year period beginning on the date your service agreement ended. How to file self employment taxes The amount of the payments depended primarily on policies sold by you or credited to your account during the last year of your service agreement or the extent to which those policies remain in force for some period after your service agreement ended, or both. How to file self employment taxes The amount of the payment did not depend to any extent on length of service or overall earnings from services performed for the company (regardless of whether eligibility for the payments depended on length of service). How to file self employment taxes Insurance agent, retired. How to file self employment taxes   Income paid by an insurance company to a retired self-employed insurance agent based on a percentage of commissions received before retirement is reported on Schedule C or C-EZ. How to file self employment taxes Also, renewal commissions and deferred commissions for sales made before retirement are generally reported on Schedule C or C-EZ. How to file self employment taxes   However, renewal commissions paid to the survivor of an insurance agent are not reported on Schedule C or C-EZ. How to file self employment taxes Newspaper carrier or distributor. How to file self employment taxes   You are a direct seller and your earnings are reported on Schedule C or C-EZ if all the following conditions apply. How to file self employment taxes You are in the business of delivering or distributing newspapers or shopping news (including directly related services such as soliciting customers and collecting receipts). How to file self employment taxes Substantially all your pay for these services directly relates to your sales or other output rather than to the number of hours you work. How to file self employment taxes You perform the services under a written contract that says you will not be treated as an employee for federal tax purposes. How to file self employment taxes   This rule applies whether or not you hire others to help you make deliveries. How to file self employment taxes It also applies whether you buy the papers from the publisher or are paid based on the number of papers you deliver. How to file self employment taxes Newspaper or magazine vendor. How to file self employment taxes   If you are 18 or older and you sell newspapers or magazines, your earnings are reported on Schedule C or C-EZ if all the following conditions apply. How to file self employment taxes You sell newspapers or magazines to ultimate consumers. How to file self employment taxes You sell them at a fixed price. How to file self employment taxes Your earnings are based on the difference between the sales price and your cost of goods sold. How to file self employment taxes   This rule applies whether or not you are guaranteed a minimum amount of earnings. How to file self employment taxes It also applies whether or not you receive credit for unsold newspapers or magazines you return to your supplier. How to file self employment taxes Notary public. How to file self employment taxes   Fees you receive for services you perform as a notary public are reported on Schedule C or C-EZ. How to file self employment taxes These payments are not subject to self-employment tax (see the instructions for Schedule SE (Form 1040)). How to file self employment taxes Public official. How to file self employment taxes   Public officials generally do not report what they earn for serving in public office on Schedule C or C-EZ. How to file self employment taxes This rule applies to payments received by an elected tax collector from state funds on the basis of a fixed percentage of the taxes collected. How to file self employment taxes Public office includes any elective or appointive office of the United States or its possessions, the District of Columbia, a state or its political subdivisions, or a wholly owned instrumentality of any of these. How to file self employment taxes   Public officials of state or local governments report their fees on Schedule C or C-EZ if they are paid solely on a fee basis and if their services are eligible for, but not covered by, social security under a federal-state agreement. How to file self employment taxes Real estate agent or direct seller. How to file self employment taxes   If you are a licensed real estate agent or a direct seller, your earnings are reported on Schedule C or C-EZ if both the following apply. How to file self employment taxes Substantially all your pay for services as a real estate agent or direct seller directly relates to your sales or other output rather than to the number of hours you work. How to file self employment taxes You perform the services under a written contract that says you will not be treated as an employee for federal tax purposes. How to file self employment taxes Securities dealer. How to file self employment taxes   If you are a dealer in options or commodities, your gains and losses from dealing or trading in section 1256 contracts (regulated futures contracts, foreign currency contracts, nonequity options, dealer equity options, and dealer securities futures contracts) or property related to those contracts (such as stock used to hedge options) are reported on Schedule C or C-EZ. How to file self employment taxes For more information, see sections 1256 and 1402(i). How to file self employment taxes Securities trader. How to file self employment taxes   You are a trader in securities if you are engaged in the business of buying and selling securities for your own account. How to file self employment taxes As a trader in securities, your gain or loss from the disposition of securities is not reported on Schedule C or C-EZ. How to file self employment taxes However, see Securities dealer , earlier, for an exception that applies to section 1256 contracts. How to file self employment taxes For more information about securities traders, see Publication 550, Investment Income and Expenses. How to file self employment taxes Accounting for Your Income Accounting for your income for income tax purposes differs at times from accounting for financial purposes. How to file self employment taxes This section discusses some of the more common differences that may affect business transactions. How to file self employment taxes Figure your business income on the basis of a tax year and according to your regular method of accounting (see chapter 2). How to file self employment taxes If the sale of a product is an income-producing factor in your business, you usually have to use inventories to clearly show your income. How to file self employment taxes Dealers in real estate are not allowed to use inventories. How to file self employment taxes For more information on inventories, see chapter 2. How to file self employment taxes Income paid to a third party. How to file self employment taxes   All income you earn is taxable to you. How to file self employment taxes You cannot avoid tax by having the income paid to a third party. How to file self employment taxes Example. How to file self employment taxes You rent out your property and the rental agreement directs the lessee to pay the rent to your son. How to file self employment taxes The amount paid to your son is gross income to you. How to file self employment taxes Cash discounts. How to file self employment taxes   These are amounts the seller permits you to deduct from the invoice price for prompt payment. How to file self employment taxes For income tax purposes, you can use either of the following two methods to account for cash discounts. How to file self employment taxes Deduct the cash discount from purchases (see Line 36, Purchases Less Cost of Items Withdrawn for Personal Use in chapter 6). How to file self employment taxes Credit the cash discount to a discount income account. How to file self employment taxes You must use the chosen method every year for all your purchase discounts. How to file self employment taxes   If you use the second method, the credit balance in the account at the end of your tax year is business income. How to file self employment taxes Under this method, you do not reduce the cost of goods sold by the cash discounts you received. How to file self employment taxes When valuing your closing inventory, you cannot reduce the invoice price of merchandise on hand at the close of the tax year by the average or estimated discounts received on the merchandise. How to file self employment taxes Trade discounts. How to file self employment taxes   These are reductions from list or catalog prices and usually are not written into the invoice or charged to the customer. How to file self employment taxes Do not enter these discounts on your books of account. How to file self employment taxes Instead, use only the net amount as the cost of the merchandise purchased. How to file self employment taxes For more information, see Trade discounts in chapter 6. How to file self employment taxes Payment placed in escrow. How to file self employment taxes   If the buyer of your property places part or all of the purchase price in escrow, you do not include any part of it in gross sales until you actually or constructively receive it. How to file self employment taxes However, upon completion of the terms of the contract and the escrow agreement, you will have taxable income, even if you do not accept the money until the next year. How to file self employment taxes Sales returns and allowances. How to file self employment taxes   Credits you allow customers for returned merchandise and any other allowances you make on sales are deductions from gross sales in figuring net sales. How to file self employment taxes Advance payments. How to file self employment taxes   Special rules dealing with an accrual method of accounting for payments received in advance are discussed in chapter 2 under Accrual Method. How to file self employment taxes Insurance proceeds. How to file self employment taxes   If you receive insurance or another type of reimbursement for a casualty or theft loss, you must subtract it from the loss when you figure your deduction. How to file self employment taxes You cannot deduct the reimbursed part of a casualty or theft loss. How to file self employment taxes   For information on casualty or theft losses, see Publication 547, Casualties, Disasters, and Thefts. How to file self employment taxes Prev  Up  Next   Home   More Online Publications