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2020 Instructions for Schedule SE Use Schedule SE (Form 1040) to Figure the Tax Due on Net Earnings from Self-Employ- Self-Employment Ment

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2020 Instructions for Schedule SE Use Schedule SE (Form 1040) to Figure the Tax Due on Net Earnings from Self-Employ- Self-Employment Ment Userid: CPM Schema: Leadpct: 100% Pt. size: 10 Draft Ok to Print i1040x AH XSL/XML Fileid: … I1040SCHSE/2020/A/XML/Cycle04/source (Init. & Date) _______ Page 1 of 7 8:50 - 7-Jan-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Department of the Treasury Internal Revenue Service 2020 Instructions for Schedule SE Use Schedule SE (Form 1040) to figure the tax due on net earnings from self-employ- Self-Employment ment. The Social Security Administration uses the information from Schedule SE to figure your benefits under the social security program. This tax applies no matter how Tax old you are and even if you are already getting social security or Medicare benefits. Additional information. See Pub. 225 or Pub. 334. Section references are to the Internal • The amount on line 4c of Sched- received as an employee (other than as a Revenue Code unless otherwise noted. ule SE is $400 or more, or minister, a member of a religious order, • You had church employee income or a Christian Science practitioner) of a Future Developments of $108.28 or more. (Income from serv- church or qualified church-controlled or- For the latest information about devel- ices you performed as a minister, mem- ganization that has a certificate in effect opments related to Schedule SE (Form ber of a religious order, or Christian Sci- electing an exemption from employer 1040) and its instructions, such as legis- ence practitioner isn't church employee social security and Medicare taxes. lation enacted after they were published, income.) See Employees of Churches go to IRS.gov/ScheduleSE. and Church Organizations. Ministers, Members of Religious Exception to filing Schedule SE. If Orders, and Christian Science What's New you filed Form 4029 or Form 4361 and Practitioners received IRS approval, you may not In most cases, you must pay SE tax on Changes to Schedule SE (Form 1040). need to file Schedule SE. See Ministers, salaries and other income for services New Part III has been added to Sched- Members of Religious Orders, and you performed as a minister, a member ule SE to allow self-employed persons Christian Science Practitioners and of a religious order who hasn’t taken a to figure a maximum amount of self-em- Members of Certain Religious Sects for vow of poverty, or a Christian Science ployment tax payments which may be information on how to report your practitioner. But if you filed Form 4361 deferred. All maximum deferral self-employment earnings. amounts will be carried to Schedule 3 and received IRS approval, you will be (Form 1040), and the total amount that Even if you had a loss or a exempt from paying SE tax on those net you may elect to defer may be further TIP small amount of income from earnings. If you had no other income reduced. self-employment, it may be to subject to SE tax, enter “Exempt—Form your benefit to file Schedule SE and use 4361” on Schedule 2 (Form 1040), Schedule SE has also been revised in- either "optional method" in the instruc- line 4. However, if you had other earn- to a single form format, and each person tions for Part II of Schedule SE (dis- ings of $400 or more subject to SE tax, with net earnings from self-employment cussed later). see line A at the top of Schedule SE. will use a separate Schedule SE. For in- If you have ever filed Form stance, people filing a joint return for Who Must Pay 2020 who each have net earnings from ! 2031 to elect social security self-employment will each complete a Self-Employment (SE) Tax CAUTION coverage on your earnings as a Schedule SE. Self-Employed Persons minister, you can’t revoke that election. Maximum income subject to social se- You must pay SE tax if you had net If you must pay SE tax, include this curity tax. For 2020, the maximum earnings of $400 or more as a self-em- income on Schedule SE, line 2. But amount of self-employment income sub- ployed person. If you are in business don’t report it on Schedule SE, line 5a; ject to social security tax is $137,700. (farm or nonfarm) for yourself, you are it isn’t considered church employee in- Credits for self-employed persons. self-employed. come. Also, include on line 2: New refundable credits are available to You also must pay SE tax on your • The rental value of a home or an certain self-employed persons impacted share of certain partnership income and allowance for a home furnished to you by the coronavirus. See the Instructions your guaranteed payments. See Partner- (including payments for utilities), and for Form 7202 for more information. ship Income or Loss, later. • The value of meals and lodging provided to you, your spouse, and your Employees of Churches and dependents for your employer's conven- General ience. Church Organizations Instructions However, don’t include on line 2: If you had church employee income of Who Must File Schedule SE • Retirement benefits you received $108.28 or more, you must pay SE tax. from a church plan after retirement, or You must file Schedule SE if: Church employee income is wages you SE-1 Jan 07, 2021 Cat. No. 24334P Page 2 of 7 Fileid: … I1040SCHSE/2020/A/XML/Cycle04/source 8:50 - 7-Jan-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. • The rental value of a home or an organization, those earnings are exempt the statement, contact the SSA Office of allowance for a home furnished to you from SE tax. International Programs. Don’t complete (including payments for utilities) after Exception–Dual citizens. A person Schedule SE. Instead, attach a copy of retirement. with dual U.S.-foreign citizenship gener- the statement to Form 1040 or Form If you were a duly ordained minister ally is considered to be a U.S. citizen for 1040-SR and enter “Exempt, see attach- who was an employee of a church and social security purposes. However, if ed statement” on Schedule 2 (Form you must pay SE tax, the unreimbursed you are a U.S. citizen and also a citizen 1040), line 4. business expenses that you incurred as a of a country with which the United church employee are not deductible as States has a bilateral social security Nonresident Alien an itemized deduction for income tax agreement, other than Canada or Italy, If you are a self-employed nonresident purposes. However, when figuring SE your work for the government of that alien living in the United States, you tax, subtract on line 2 the allowable ex- foreign country is always exempt from must pay SE tax if an international so- penses from your self-employment earn- U.S. social security taxes. For further in- cial security agreement in effect deter- ings and attach an explanation. formation about these agreements, see mines that you are covered under the If you were a U.S. citizen or resident the exception shown in the next section. U.S. social security system. See Excep- alien serving outside the United States tion under U.S. Citizens or Resident Ali- as a minister or member of a religious U.S. Citizens or Resident Aliens ens Living Outside the United States, order and you must pay SE tax, you Living Outside the United States earlier, for information about interna- can’t reduce your net earnings by the If you are a self-employed U.S. citizen tional social security agreements. If your foreign earned income exclusion or the or resident alien living outside the Uni- self-employment income is subject to foreign housing exclusion or deduction. ted States, in most cases you must pay SE tax, complete Schedule SE and file it See Pub. 517 for details. SE tax. You can’t reduce your foreign with your Form 1040-NR. earnings from self-employment by your Members of Certain Religious foreign earned income exclusion. Chapter 11 Bankruptcy Cases Sects Exception. The United States has social While you are a debtor in a chapter 11 bankruptcy case, your net profit or loss If you have conscientious objections to security agreements with many countries from self-employment (for example, social security insurance because of to eliminate dual taxes under two social from Schedule C or Schedule F) won't your membership in and belief in the security systems. Under these agree- be included in your Form 1040 or Form teachings of a religious sect recognized ments, you generally must pay social se- 1040-SR income. Instead, it will be in- as being in existence at all times since curity and Medicare taxes to only the cluded on the income tax return (Form December 31, 1950, and which has pro- country in which you live. 1041) of the bankruptcy estate. Howev- vided a reasonable level of living for its The United States now has social se- er, you (not the bankruptcy estate) are dependent members, you are exempt curity agreements with the following responsible for paying SE tax on your from SE tax if you received IRS appro- countries: Australia, Austria, Belgium, net earnings from self-employment. val by filing Form 4029. In this case, Brazil, Canada, Chile, Czech Republic, don’t file Schedule SE. Instead, enter Denmark, Finland, France, Germany, Enter on the dotted line to the left of “Exempt—Form 4029” on Schedule 2 Greece, Hungary, Iceland, Ireland, Italy, Schedule SE, line 3, “Chap.
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