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File Taxes For 2012

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File Taxes For 2012

File taxes for 2012 12. File taxes for 2012   Self-Employment Tax Table of Contents What's New for 2013 What's New for 2014 Introduction Topics - This chapter discusses: Useful Items - You may want to see: Why Pay Self-Employment Tax? How To Pay Self-Employment TaxReplacing a lost social security card. File taxes for 2012 Name change. File taxes for 2012 Penalty for underpayment of estimated tax. File taxes for 2012 Who Must Pay Self-Employment Tax?Limited partner. File taxes for 2012 Community property. File taxes for 2012 Figuring Self-Employment EarningsLandlord Participation in Farming Methods for Figuring Net EarningsRegular Method Farm Optional Method Nonfarm Optional Method Using Both Optional Methods Reporting Self-Employment Tax What's New for 2013 Tax rates. File taxes for 2012  For tax years beginning in 2013, the social security part of the self-employment tax increases from 10. File taxes for 2012 4% to 12. File taxes for 2012 4%. File taxes for 2012 The Medicare part of the tax remains at 2. File taxes for 2012 9%. File taxes for 2012 As a result, the self-employment tax is increased from 13. File taxes for 2012 3% to 15. File taxes for 2012 3%. File taxes for 2012 Additional Medicare Tax. File taxes for 2012 . File taxes for 2012  For tax years beginning in 2013, a 0. File taxes for 2012 9% Additional Medicare Tax applies to your Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income above a threshold amount. File taxes for 2012 Use Form 8959, Additional Medicare Tax, to figure this tax. File taxes for 2012 For more information, see the Instructions for Form 8959. File taxes for 2012 Maximum net earnings. File taxes for 2012  The maximum net self-employment earnings subject to the social security part (12. File taxes for 2012 4%) of the self-employment tax increased to $113,700 for 2013. File taxes for 2012 There is no maximum limit on earnings subject to the Medicare part (2. File taxes for 2012 9%). File taxes for 2012 What's New for 2014 Maximum net earnings. File taxes for 2012  The maximum net self-employment earnings subject to the social security part of the self-employment tax for 2014 will be discussed in the 2013 Publication 334. File taxes for 2012 Introduction Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. File taxes for 2012 It is similar to the social security and Medicare taxes withheld from the pay of most wage earners. File taxes for 2012 You usually have to pay SE tax if you are self-employed. File taxes for 2012 You are usually self-employed if you operate your own farm on land you either own or rent. File taxes for 2012 You have to figure SE tax on Schedule SE (Form 1040). File taxes for 2012 Farmers who have employees may have to pay the employer's share of social security and Medicare taxes, as well. File taxes for 2012 See chapter 13 for information on employment taxes. File taxes for 2012 Self-employment tax rate. File taxes for 2012   For tax years beginning in 2013, the self-employment tax rate is 15. File taxes for 2012 3%. File taxes for 2012 The rate consists of two parts: 12. File taxes for 2012 4% for social security (old-age, survivors, and disability insurance) and 2. File taxes for 2012 9% for Medicare (hospital insurance). File taxes for 2012 Topics - This chapter discusses: Why pay self-employment tax How to pay self-employment tax Who must pay self-employment tax Figuring self-employment earnings Landlord participation in farming Methods for figuring net earnings Reporting self-employment tax Useful Items - You may want to see: Publication 541 Partnerships Form (and Instructions) 1040 U. File taxes for 2012 S. File taxes for 2012 Individual Income Tax Return Sch F (Form 1040) Profit or Loss From Farming Sch SE (Form 1040) Self-Employment Tax 1065 U. File taxes for 2012 S. File taxes for 2012 Return of Partnership Income Sch K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. File taxes for 2012 See chapter 16 for information about getting publications and forms. File taxes for 2012 Why Pay Self-Employment Tax? Social security benefits are available to self-employed persons just as they are to wage earners. File taxes for 2012 Your payments of SE tax contribute to your coverage under the social security system. File taxes for 2012 Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. File taxes for 2012 How to become insured under social security. File taxes for 2012   You must be insured under the social security system before you begin receiving social security benefits. File taxes for 2012 You are insured if you have the required number of credits (also called quarters of coverage). File taxes for 2012 Earning credits in 2013. File taxes for 2012   You can earn a maximum of four credits per year. File taxes for 2012 For 2013, you earn one credit for each $1,160 of combined wages and self-employment earnings subject to social security tax. File taxes for 2012 You need $4,640 ($1,160 × 4) of combined wages and self-employment earnings subject to social security tax to earn four credits in 2013. File taxes for 2012 It does not matter whether the income is earned in 1 quarter or is spread over 2 or more quarters. File taxes for 2012 For an explanation of the number of credits you must have to be insured and the benefits available to you and your family under the social security program, consult your nearest Social Security Administration (SSA) office or visit the SSA website at www. File taxes for 2012 socialsecurity. File taxes for 2012 gov. File taxes for 2012 Making false statements to get or to increase social security benefits may subject you to penalties. File taxes for 2012 The Social Security Administration (SSA) time limit for posting self-employment earnings. File taxes for 2012   Generally, the SSA will give you credit only for self-employment earnings reported on a tax return filed within 3 years, 3 months, and 15 days after the tax year you earned the income. File taxes for 2012    If you file your tax return or report a change in your self-employment earnings after the SSA time limit for posting self-employment earnings, the SSA may change its records, but only to remove or reduce the amount. File taxes for 2012 The SSA will not change its records to increase your self-employment earnings after the SSA time limit listed above. File taxes for 2012 How To Pay Self-Employment Tax To pay SE tax, you must have a social security number (SSN) or an individual taxpayer identification number (ITIN). File taxes for 2012 This section explains how to: Obtain an SSN or ITIN, and Pay your SE tax using estimated tax. File taxes for 2012 An ITIN does not entitle you to social security benefits. File taxes for 2012 Obtaining an ITIN does not change your immigration or employment status under U. File taxes for 2012 S. File taxes for 2012 law. File taxes for 2012 Obtaining a social security number. File taxes for 2012   If you have never had an SSN, apply for one using Form SS-5, Application for a Social Security Card. File taxes for 2012 The application is also available in Spanish. File taxes for 2012 You can get this form at any Social Security office or by calling 1-800-772-1213. File taxes for 2012    You can also download Form SS-5 from the Social Security Administration website at  www. File taxes for 2012 socialsecurity. File taxes for 2012 gov. File taxes for 2012   If you have a social security number from the time you were an employee, you must use that number. File taxes for 2012 Do not apply for a new one. File taxes for 2012 Replacing a lost social security card. File taxes for 2012   If you have a number but lost your card, file Form SS-5. File taxes for 2012 You will get a new card showing your original number, not a new number. File taxes for 2012 Name change. File taxes for 2012   If your name has changed since you received your social security card, complete Form SS-5 to report a name change. File taxes for 2012 Obtaining an individual taxpayer identification number. File taxes for 2012   The IRS will issue you an ITIN, for tax use only, if you are a nonresident or resident alien and you do not have, and are not eligible to get, an SSN. File taxes for 2012 To apply for an ITIN, file Form W-7, Application for IRS Individual Taxpayer Identification Number. File taxes for 2012 You can get this form by calling 1-800-829-3676. File taxes for 2012 For more information on ITINs, see Publication 1915, Understanding Your IRS Individual Taxpayer Identification Number. File taxes for 2012 Form W-7 and Publication 1915 are also available in Spanish. File taxes for 2012    You can also download Form W-7 from the IRS website at IRS. File taxes for 2012 gov. File taxes for 2012 Paying estimated tax. File taxes for 2012   Estimated tax is the method used to pay tax (including SE tax) on income not subject to withholding. File taxes for 2012 You generally have to make estimated tax payments if you expect to owe tax, including SE tax, of $1,000 or more when you file your return. File taxes for 2012 Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay the tax. File taxes for 2012   However, if at least two-thirds of your gross income for 2013 or 2014 was from farming and you file your 2014 Form 1040 and pay all the tax due by March 2, 2015, you do not have to pay any estimated tax. File taxes for 2012 For more information about estimated tax for farmers, see chapter 15. File taxes for 2012 Penalty for underpayment of estimated tax. File taxes for 2012   You may have to pay a penalty if you do not pay enough estimated tax by its due date. File taxes for 2012 Who Must Pay Self-Employment Tax? You must pay SE tax and file Schedule SE (Form 1040) if your net earnings from self-employment were $400 or more. File taxes for 2012 The SE tax rules apply no matter how old you are and even if you are already receiving social security or Medicare benefits. File taxes for 2012 Aliens. File taxes for 2012   Generally, resident aliens must pay self-employment tax under the same rules that apply to U. File taxes for 2012 S. File taxes for 2012 citizens. File taxes for 2012 Nonresident aliens are not subject to self-employment tax. File taxes for 2012 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. File taxes for 2012 S. File taxes for 2012 residents for self-employment tax purposes. File taxes for 2012 For more information on aliens, see Publication 519, U. File taxes for 2012 S. File taxes for 2012 Tax Guide for Aliens. File taxes for 2012 Are you self-employed?   You are self-employed if you carry on a trade or business (such as running a farm) as a sole proprietor, an independent contractor, a member of a partnership, or are otherwise in business for yourself. File taxes for 2012 A trade or business is generally an activity carried on for a livelihood or in good faith to make a profit. File taxes for 2012 Share farmer. File taxes for 2012   You are a self-employed farmer under an income-sharing arrangement if both the following apply. File taxes for 2012 You produce a crop or raise livestock on land belonging to another person. File taxes for 2012 Your share of the crop or livestock, or the proceeds from their sale, depends on the amount produced. File taxes for 2012 Your net farm profit or loss from the income-sharing arrangement is reported on Schedule F (Form 1040) and included in your self-employment earnings. File taxes for 2012   If you produce a crop or livestock on land belonging to another person and are to receive a specified rate of pay, a fixed sum of money, or a fixed quantity of the crop or livestock, and not a share of the crop or livestock or their proceeds, you may be either self-employed or an employee of the landowner. File taxes for 2012 This will depend on whether the landowner has the right to direct or control your performance of services. File taxes for 2012 Example. File taxes for 2012 A share farmer produces a crop on land owned by another person on a 50-50 crop-share basis. File taxes for 2012 Under the terms of their agreement, the share farmer furnishes the labor and half the cost of seed and fertilizer. File taxes for 2012 The landowner furnishes the machinery and equipment used to produce and harvest the crop, and half the cost of seed and fertilizer. File taxes for 2012 The share farmer is provided a house in which to live. File taxes for 2012 The landowner and the share farmer decide on a cropping plan. File taxes for 2012 The share farmer is a self-employed farmer for purposes of the agreement to produce the crops, and the share farmer's part of the profit or loss from the crops is reported on Schedule F (Form 1040) and included in self-employment earnings. File taxes for 2012 The tax treatment of the landowner is discussed later under Landlord Participation in Farming. File taxes for 2012 Contract farming. File taxes for 2012   Under typical contract farming arrangements, the grower receives a fixed payment per unit of crops or finished livestock delivered to the processor or packing company. File taxes for 2012 Since the grower typically furnishes labor and bears some production risk, the payments are reported on Schedule F and are therefore subject to self-employment tax. File taxes for 2012 4-H Club or FFA project. File taxes for 2012   If an individual participates in a 4-H Club or Future Farmers of America (FFA) project, any net income received from sales or prizes related to the project may be subject to income tax. File taxes for 2012 Report the net income as “Other income” on line 21 of Form 1040. File taxes for 2012 If necessary, attach a statement showing the gross income and expenses. File taxes for 2012 The net income may not be subject to SE tax if the project is primarily for educational purposes and not for profit, and is completed by the individual under the rules and economic restrictions of the sponsoring 4-H or FFA organization. File taxes for 2012 Such a project is generally not considered a trade or business. File taxes for 2012 Partners in a partnership. File taxes for 2012   Generally, you are self-employed if you are a member of a partnership that carries on a trade or business. File taxes for 2012 Limited partner. File taxes for 2012   If you are a limited partner, your partnership income is generally not subject to SE tax. File taxes for 2012 However, guaranteed payments you receive for services you perform for the partnership are subject to SE tax and should be reported to you in box 14 of your Schedule K-1 (Form 1065). File taxes for 2012 Business Owned and Operated by Spouses. File taxes for 2012   If you and your spouse jointly own and operate a farm as an unincorporated business and share in the profits and losses, you are partners in a partnership whether or not you have a formal partnership agreement. File taxes for 2012 You must file Form 1065, instead of Schedule F, unless you make a joint election to be treated as a qualified joint venture. File taxes for 2012 Making this election will allow you to avoid the complexity of Form 1065 but still give each spouse credit for social security earnings on which retirement benefits are based. File taxes for 2012 Qualified joint venture. File taxes for 2012   If you and your spouse each materially participate as the only members of a jointly owned and operated farm, and you file a joint tax return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership for the tax year. File taxes for 2012 For an explanation of “material participation,” see the instructions for Schedule C, line G, and the instructions for Schedule F, line E. File taxes for 2012   To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. File taxes for 2012 Each of you must file a separate Schedule F and a separate Schedule SE. File taxes for 2012 For more information, see Qualified Joint Venture in the Instructions for Schedule SE (Form 1040). File taxes for 2012 Spouse employee. File taxes for 2012   If your spouse is your employee, not your partner, you must withhold and pay social security and Medicare taxes for him or her. File taxes for 2012 For more information about employment taxes, see chapter 13. File taxes for 2012 Community property. File taxes for 2012   If you are a partner and your distributive share of any income or loss from a trade or business carried on by the partnership is community property, treat your share as your self-employment earnings. File taxes for 2012 Do not treat any of your share as self-employment earnings of your spouse. File taxes for 2012 Figuring Self-Employment Earnings Farmer. File taxes for 2012   If you are self-employed as a farmer, use Schedule F (Form 1040) to figure your self-employment earnings. File taxes for 2012 Partnership income or loss. File taxes for 2012   If you are a member of a partnership that carries on a trade or business, the partnership should report your self-employment earnings in box 14, code A, of your Schedule K-1 (Form 1065). File taxes for 2012 Box 14 of Schedule K-1 may also provide amounts for gross farming or fishing income (code B) and gross nonfarm income (code C). File taxes for 2012 Use these amounts if you use the farm or nonfarm optional method to figure net earnings from self-employment (see Methods for Figuring Net Earnings , later). File taxes for 2012   If you are a general partner, you may need to reduce these reported earnings by amounts you claim as a section 179 deduction, unreimbursed partnership expenses, or depletion on oil and gas properties. File taxes for 2012   If the amount reported is a loss, include only the deductible amount when you figure your total self-employment earnings. File taxes for 2012   For more information, see the Partner's Instructions for Schedule K-1 (Form 1065). File taxes for 2012   For general information on partnerships, see Publication 541. File taxes for 2012 More than one business. File taxes for 2012   If you have self-employment earnings from more than one trade, business, or profession, you generally must combine the net profit or loss from each to determine your total self-employment earnings. File taxes for 2012 A loss from one business reduces your profit from another business. File taxes for 2012 However, do not combine earnings from farm and nonfarm businesses if you are using one of the optional methods (discussed later) to figure net earnings. File taxes for 2012 Community property. File taxes for 2012   If any of the income from a farm or business, other than a partnership, is community property under state law, it is included in the self-employment earnings of the spouse carrying on the trade or business. File taxes for 2012 Lost income payments. File taxes for 2012   Lost income payments received from insurance or other sources for reducing or stopping farming activities are included in self-employment earnings. File taxes for 2012 These include USDA payments to compensate for lost income resulting from reductions in tobacco quotas and allotments. File taxes for 2012 Even if you are not farming when you receive the payment, it is included in self-employment earnings if it relates to your farm business (even though it is temporarily inactive). File taxes for 2012 A connection exists if it is clear the payment would not have been made but for your conduct of your farm business. File taxes for 2012 Gain or loss. File taxes for 2012   A gain or loss from the disposition of property that is neither stock in trade nor held primarily for sale to customers is not included in self-employment earnings. File taxes for 2012 It does not matter whether the disposition is a sale, exchange, or involuntary conversion. File taxes for 2012 For example, gains or losses from the disposition of the following types of property are not included in self-employment earnings. File taxes for 2012 Investment property. File taxes for 2012 Depreciable property or other fixed assets used in your trade or business. File taxes for 2012 Livestock held for draft, breeding, sport, or dairy purposes, and not held primarily for sale, regardless of how long the livestock was held, or whether it was raised or purchased. File taxes for 2012 Unharvested standing crops sold with land held more than 1 year. File taxes for 2012 Timber, coal, or iron ore held for more than 1 year if an economic interest was retained, such as a right to receive coal royalties. File taxes for 2012   A gain or loss from the cutting of timber is not included in self-employment earnings if the cutting is treated as a sale or exchange. File taxes for 2012 For more information on electing to treat the cutting of timber as a sale or exchange, see Timber in chapter 8. File taxes for 2012 Wages and salaries. File taxes for 2012   Wages and salaries received for services performed as an employee and covered by social security or railroad retirement are not included in self-employment earnings. File taxes for 2012   Wages paid in kind to you for agricultural labor, such as commodity wages, are not included in self-employment earnings. File taxes for 2012 Retired partner. File taxes for 2012   Retirement income received by a partner from his or her partnership under a written plan is not included in self-employment earnings if all the following apply. File taxes for 2012 The retired partner performs no services for the partnership during the year. File taxes for 2012 The retired partner is owed only the retirement payments. File taxes for 2012 The retired partner's share (if any) of the partnership capital was fully paid to the retired partner. File taxes for 2012 The payments to the retired partner are lifelong periodic payments. File taxes for 2012 Conservation Reserve Program (CRP) payments. File taxes for 2012   Under the Conservation Reserve Program (CRP), if you own or operate highly erodible or other specified cropland, you may enter into a longterm contract with the USDA, agreeing to convert to a less intensive use of that cropland. File taxes for 2012 You must include the annual rental payments and any onetime incentive payment you receive under the program on Schedule F, lines 4a and 4b. File taxes for 2012 Cost share payments you receive may qualify for the costsharing exclusion. File taxes for 2012 See Cost-Sharing Exclusion (Improvements), above. File taxes for 2012 CRP payments are reported to you on Form 1099G. File taxes for 2012 Individuals who are receiving Social Security retirement or disability benefits may exclude CRP payments when calculating self-employment tax. File taxes for 2012 See the instructions for Schedule SE (Form 1040). File taxes for 2012 Self-employed health insurance deduction. File taxes for 2012   You cannot deduct the self-employed health insurance deduction you report on Form 1040, line 29, from self-employment earnings on Schedule SE (Form 1040). File taxes for 2012 Landlord Participation in Farming As a general rule, income and deductions from rentals and from personal property leased with real estate are not included in determining self-employment earnings. File taxes for 2012 However, income and deductions from farm rentals, including government commodity program payments received by a landowner who rents land, are included if the rental arrangement provides that the landowner will, and does, materially participate in the production or management of production of the farm products on the land. File taxes for 2012 Crop shares. File taxes for 2012   Rent paid in the form of crop shares is included in self-employment earnings for the year you sell, exchange, give away, or use the crop shares if you meet one of the four material participation tests (discussed next) at the time the crop shares are produced. File taxes for 2012 Feeding such crop shares to livestock is considered using them. File taxes for 2012 Your gross income for figuring your self-employment earnings includes the fair market value of the crop shares when they are used as feed. File taxes for 2012 Material participation for landlords. File taxes for 2012   You materially participate if you have an arrangement with your tenant for your participation and you meet one or more of the following tests. File taxes for 2012 You do at least three of the following. File taxes for 2012 Pay, using cash or credit, at least half the direct costs of producing the crop or livestock. File taxes for 2012 Furnish at least half the tools, equipment, and livestock used in the production activities. File taxes for 2012 Advise or consult with your tenant. File taxes for 2012 Inspect the production activities periodically. File taxes for 2012 You regularly and frequently make, or take an important part in making, management decisions substantially contributing to or affecting the success of the enterprise. File taxes for 2012 You work 100 hours or more spread over a period of 5 weeks or more in activities connected with agricultural production. File taxes for 2012 You do things that, considered in their totality, show you are materially and significantly involved in the production of the farm commodities. File taxes for 2012 These tests may be used as general guides for determining whether you are a material participant. File taxes for 2012 Example. File taxes for 2012 Drew Houston agrees to produce a crop on J. File taxes for 2012 Clarke's cotton farm, with each receiving half the proceeds. File taxes for 2012 Clarke advises Houston when to plant, spray, and pick the cotton. File taxes for 2012 During the growing season, Clarke inspects the crop every few days to determine whether Houston is properly taking care of the crop. File taxes for 2012 Houston furnishes all labor needed to grow and harvest the crop. File taxes for 2012 The management decisions made by Clarke in connection with the care of the cotton crop and his regular inspection of the crop establish that he participates to a material degree in the cotton production operations. File taxes for 2012 The income Clarke receives from his cotton farm is included in his self-employment earnings. File taxes for 2012 Methods for Figuring Net Earnings There are three ways to figure your net earnings from self-employment. File taxes for 2012 The regular method. File taxes for 2012 The farm optional method. File taxes for 2012 The nonfarm optional method. File taxes for 2012 You must use the regular method unless you are eligible to use one or both of the optional methods. File taxes for 2012 See Figure 12-1 , shown later. File taxes for 2012 Figure 12-1. File taxes for 2012 Can I Use the Optional Methods? Please click here for the text description of the image. File taxes for 2012 Figure 12–1. File taxes for 2012 Can I Use the Optional Methods? Why use an optional method?   You may want to use the optional methods (discussed later) when you have a loss or a small net profit and any one of the following applies. File taxes for 2012 You want to receive credit for social security benefit coverage. File taxes for 2012 You incurred child or dependent care expenses for which you could claim a credit. File taxes for 2012 (An optional method may increase your earned income, which could increase your credit. File taxes for 2012 ) You are entitled to the earned income credit. File taxes for 2012 (An optional method may increase your earned income, which could increase your credit. File taxes for 2012 ) You are entitled to the additional child tax credit. File taxes for 2012 (An optional method may increase your earned income, which could increase your credit. File taxes for 2012 ) Effects of using an optional method. File taxes for 2012   Using an optional method could increase your SE tax. File taxes for 2012 Paying more SE tax may result in you getting higher social security disability or retirement benefits. File taxes for 2012   If you use either or both optional methods, you must figure and pay the SE tax due under these methods even if you would have had a smaller SE tax or no SE tax using the regular method. File taxes for 2012   The optional methods may be used only to figure your SE tax. File taxes for 2012 To figure your income tax, include your actual self-employment earnings in gross income, regardless of which method you use to determine SE tax. File taxes for 2012 Regular Method Multiply your total self-employment earnings by 92. File taxes for 2012 35% (. File taxes for 2012 9235) to get your net earnings under the regular method. File taxes for 2012 See Short Schedule SE, line 4, or Long Schedule SE, line 4a. File taxes for 2012 Net earnings figured using the regular method are also called “actual net earnings. File taxes for 2012 ” Farm Optional Method Use the farm optional method only for self-employment earnings from a farming business. File taxes for 2012 You can use this method if you meet either of the following tests. File taxes for 2012 Your gross farm income is $6,960 or less. File taxes for 2012 Your net farm profits are less than $5,024. File taxes for 2012 Gross farm income. File taxes for 2012   Your gross farm income is the total of the amounts from: Schedule F (Form 1040), line 9, and Schedule K-1 (Form 1065), box 14, code B (from farm partnerships). File taxes for 2012 Net farm profits. File taxes for 2012   Net farm profits generally are the total of the amounts from: Schedule F (Form 1040), line 34, and Schedule K-1 (Form 1065), box 14, code A (from farm partnerships). File taxes for 2012 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. File taxes for 2012 For more information, see Partnership income or loss , earlier. File taxes for 2012 Figuring farm net earnings. File taxes for 2012   If you meet either of the two tests explained above, use Table 12-1. File taxes for 2012 Figuring Farm Net Earnings , to figure your net earnings from self-employment under the farm optional method. File taxes for 2012 Table 12-1. File taxes for 2012 Figuring Farm Net Earnings IF your gross farm income  is. File taxes for 2012 . File taxes for 2012 . File taxes for 2012 THEN your net earnings are equal to. File taxes for 2012 . File taxes for 2012 . File taxes for 2012 $6,960 or less Two-thirds of your gross farm income. File taxes for 2012 More than $6,960 $4,640 Optional method can reduce or eliminate SE tax. File taxes for 2012   If your gross farm income is $6,960 or less and your farm net earnings figured under the farm optional method are less than your actual net earnings, you can use the farm optional method to reduce or eliminate your SE tax. File taxes for 2012 Your actual net earnings are your net earnings figured using the regular method, explained earlier. File taxes for 2012 Example. File taxes for 2012 Your gross farm income is $540 and your net farm profit is $460. File taxes for 2012 Consequently, your net earnings figured under the farm optional method are $360 (2/3 of $540) and your actual net earnings are $425 (92. File taxes for 2012 35% of $460). File taxes for 2012 You owe no SE tax if you use the optional method because your net earnings under the farm optional method are less than $400. File taxes for 2012 Nonfarm Optional Method This is an optional method available for determining net earnings from nonfarm self-employment, much like the farm optional method. File taxes for 2012 If you are also engaged in a nonfarm business, you may be able to use this method to figure your nonfarm net earnings. File taxes for 2012 You can use this method even if you do not use the farm optional method for determining your farm net earnings and even if you have a net loss from your nonfarm business. File taxes for 2012 For more information about the nonfarm optional method, see Publication 334. File taxes for 2012 You cannot combine farm and nonfarm self-employment earnings to figure your net earnings under either of the optional methods. File taxes for 2012 Using Both Optional Methods If you use both optional methods, you must add the net earnings figured under each method to arrive at your total net earnings from self-employment. File taxes for 2012 You can report less than your total actual farm and nonfarm net earnings but not less than actual nonfarm net earnings. File taxes for 2012 If you use both optional methods, you can report no more than $4,640 as your combined net earnings from self-employment. File taxes for 2012 Reporting Self-Employment Tax Use Schedule SE (Form 1040) to figure and report your SE tax. File taxes for 2012 Then, enter the SE tax on line 56 of Form 1040 and attach Schedule SE to Form 1040. File taxes for 2012 Most taxpayers can use Section A–Short Schedule SE to figure their SE tax. File taxes for 2012 However, certain taxpayers must use Section B–Long Schedule SE. File taxes for 2012 Use the chart on page 1 of Schedule SE to find out which one to use. File taxes for 2012 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. File taxes for 2012 Deduction for employer-equivalent portion of self-employment tax. File taxes for 2012   You can deduct the employer-equivalent portion of your SE tax in figuring your adjusted gross income. File taxes for 2012 This deduction only affects your income tax. File taxes for 2012 It does not affect either your net earnings from self-employment or your SE tax. File taxes for 2012   To deduct the tax, enter on Form 1040, line 27, the amount shown on Section A, Line 6, or Section B, line 13, Deduction for employer-equivalent portion of self-employment tax, of the Schedule SE. File taxes for 2012 Joint return. File taxes for 2012   Even if you file a joint return, you cannot file a joint Schedule SE. File taxes for 2012 This is true whether one spouse or both spouses have self-employment earnings. File taxes for 2012 Your spouse is not considered self-employed just because you are. File taxes for 2012 If both of you have self-employment earnings, each of you must complete a separate Schedule SE. File taxes for 2012 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. File taxes for 2012 Attach both schedules to the joint return. File taxes for 2012 If you and your spouse operate a business as a partnership, see Business Owned and Operated by Spouses and Qualified joint venture , earlier, under Who Must Pay Self-Employment Tax . File taxes for 2012 Prev  Up  Next   Home   More Online Publications
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Additional information may be found in: 

The following questions and answers provide information to individuals of the same sex and opposite sex who are in registered domestic partnerships, civil unions, or other similar formal relationships that are not marriages under state law. These individuals are not considered as married or spouses for federal tax purposes.

Additional information on these issues may be found in Notice 2013-61, Revenue Ruling 2013-17 and news release IR-2013-72, Treasury and IRS Announce That All Legal Same-Sex Marriages Will Be Recognized For Federal Tax Purposes; Ruling Provides Certainty, Benefits and Protections Under Federal Tax Law for Same-Sex Married Couples. 


Tax Return Preparer Requirements

The IRS has undertaken several initiatives to reach tax return preparers with education and enforcement. All paid preparers must register with the IRS and obtain a Preparer Tax Identification Number (PTIN). Find out more.


Consumer Alerts

‪Please note that the IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.

  • ‪If you get an unsolicited email that appears to be from the IRS, please report it by sending it to phishing@irs.gov. ‪
  • If you find a suspicious website that claims to be the IRS, please send the site’s URL by email to phishing@irs.gov, using the subject line: suspicious website.

For more information on phishing scams, please see Suspicious e-Mails and Identity Theft.

March 2014
New Email Phishing Scam

The IRS has been alerted to a new email phishing scam. The emails appear to be from the IRS Taxpayer Advocate Service and include a bogus case number and the following message:

“Your reported 2013 income is flagged for review due to a document processing error. Your case has been forwarded to the Taxpayer Advocate Service for resolution assistance. To avoid delays processing your 2013 filing contact the Taxpayer Advocate Service for resolution assistance.”

The recipient is directed to click on links that supposedly provide information about the "advocate" assigned to their case or that let them "review reported income."  The links lead to web pages that solicit personal information.

Taxpayers who get these messages should not respond to the email or click on the links. Instead, they should forward the scam emails to the IRS at phishing@irs.gov. For more information, visit the IRS's Report Phishing web page.

The Taxpayer Advocate Service is a legitimate IRS organization that helps taxpayers resolve federal tax issues that have not been resolved through the normal IRS channels. The IRS, including TAS, does not initiate contact with taxpayers by email, texting or any social media.

November 2013
Typhoon Haiyan Relief Scams

Possible scams are taking place in the wake of Typhoon Haiyan. On Nov. 8, 2013, Typhoon Haiyan — known as Yolanda in the Philippines — made landfall in the central Philippines, bringing strong winds and heavy rains that have resulted in flooding, landslides, and widespread damage.

Following major disasters, it is common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers. Such fraudulent schemes may involve contact by telephone, social media, email or in-person solicitations.

October 2013
Telephone Scam Now Making the Rounds

The IRS warns consumers about a sophisticated phone scam targeting taxpayers, including recent immigrants, throughout the country. Victims are told they owe money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. If the victim refuses to cooperate, they are then threatened with arrest, deportation or suspension of a business or driver’s license. Characteristics of this scam include:

  • Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves.
  • Scammers may be able to recite the last four digits of a victim’s Social Security Number.
  • Scammers spoof the IRS toll-free number on caller ID to make it appear that it’s the IRS calling.
  • Scammers sometimes send bogus IRS emails to some victims to support their bogus calls.
  • Victims hear background noise of other calls being conducted to mimic a call site.
  • After threatening victims with jail time or driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.

If you know you owe taxes or you think you might owe taxes, call the IRS at 1-800-829-1040. If you know you don’t owe taxes or have no reason to think that you owe any taxes (for example, you’ve never received a bill or the caller made some bogus threats as described above), call and report the incident to the Treasury Inspector General for Tax Administration at 1-800-366-4484. 

October 2012
Don't Fall for Phony IRS Websites

The IRS warns consumers about a new tax scam that uses a website that mimics the IRS e-Services online registration page.

‪The actual IRS e-Services page offers web-based products for tax preparers, not the general public. The phony web page looks almost identical to the real one.

The IRS gets many reports of fake websites like this. Criminals use these sites to lure people into providing personal and financial information that may be used to steal the victim’s money or identity. Typically, identity thieves empty the victim’s financial accounts, run up charges on the victim’s existing credit cards or apply for new loans, credit cards, services or benefits in the victim’s name.

‪The address of the official IRS website is www.irs.gov. Don’t be misled by sites claiming to be the IRS but ending in .com, .net, .org or other designations instead of .gov.

The IRS website has information that can help you protect yourself from tax scams of all kinds. Search the site using the term: phishing.


Interim Changes to the ITIN Application Process

Effective June 22, 2012, the IRS has made interim changes that affect the Individual Taxpayer Identification Number (ITIN) application process. Some of the information below, including the documentation requirements for individuals seeking an ITIN, has been superseded by these changes. Taxpayers and their representatives should review these changes, which are further explained in these Frequently Asked Questions, before requesting an ITIN.

On Oct. 2, 2012, the IRS implemented clarifying changes to its temporary procedures for issuing ITINs for noncitizens with tax Extensions and many foreign students.

Beginning Jan. 1, 2013, the IRS implemented improvements to the Individual Taxpayer Identification Number (ITIN) application process. These changes were developed based on an extensive review and feedback from a variety of stakeholders. The updated ITIN procedures build on changes announced last summer and fall to better protect the integrity of the ITIN application process and strengthen the refund process. Read about the new program changes and check out the latest frequently asked questions for more information.


Help for Victims of Ponzi Investment Schemes

If you've been the victim of a Ponzi scheme, find out more about how it affects your tax situation. We also have some new Q&As about distributions received from a trustee/receiver.


Principal Reduction Alternative Under the Home Affordable Modification Program

Find the answers to your tax questions on the Principal Reduction Alternative under the Home Affordable Modification Program (HAMP), which was established by the Departments of the Treasury and Housing and Urban Development to help distressed homeowners lower their monthly mortgage payments. The Principal Reduction Alternative does not apply to loans that are owned or guaranteed by Fannie Mae or Freddie Mac.


Tax Scams

Don't fall victim to tax scams. Remember — if it sounds too good to be true, it probably is. If you know of a tax fraud, you can report it to the IRS by sending completed Form 3949-A, Information Referral, to Internal Revenue Service, Fresno, CA 93888. Download the form or call 1-800-829-3676 to order by mail.

For recent scams, see:

  • IR-2014-16, IRS Releases the “Dirty Dozen” Tax Scams for 2014; Identity Theft, Phone Scams Lead List
  • IR-2013-33, IRS Releases the Dirty Dozen Tax Scams for 2013
  • IR-2012-23, IRS Releases the Dirty Dozen Tax Scams for 2012
  • IR-2011-73, IRS Urges Taxpayers to Avoid Becoming Victims of Tax Scam
  • IR-2011-39, Don’t Fall Prey to the 2011 Dirty Dozen Tax Scams

Education is the best way to avoid the pitfalls of these “too good to be true” tax scams. For additional information, see:


Phishing Scams

The IRS does not send taxpayers unsolicited emails about their tax accounts, tax situations or personal tax issues. If you receive such an email, most likely it's a scam.

IRS impersonation schemes flourish during filing season. These schemes may take place via phone, fax, Internet sites, social networking sites and particularly email. 

Many impersonations are identity theft scams that try to trick victims into revealing personal and financial information that can be used to access their financial accounts. Some email scams contain attachments or links that, when clicked, download malicious code (virus) that infects your computer or direct you to a bogus form or site posing as a genuine IRS form or web site. 

Some impersonations may be commercial Internet sites that consumers unknowingly visit, thinking they're accessing the genuine IRS website, www.IRS.gov. However, such sites have no connection to the IRS.

For more information on scams and what to do if you're subject to one, see: 


Tax Avoidance Transactions

Read up on the IRS's campaign against abusive tax avoidance transactions. Taxpayers with unreported income relating to offshore transactions who wish to voluntarily disclose the information to the IRS can find information on the process.


Why Pay Taxes? The Truth about Frivolous Tax Arguments

The Truth About Frivolous Tax Arguments (PDF 405K) addresses some of the more common false "legal" arguments made by individuals and groups who oppose compliance with the federal tax laws. These arguments are grouped under six general categories, with variations within each category. Each contention is briefly explained, followed by a discussion of the legal authority that rejects the contention. The second section deals with frivolous arguments encountered in collection due process cases. The final section illustrates penalties imposed on those pursuing frivolous cases.

 

Page Last Reviewed or Updated: 28-Mar-2014

The File Taxes For 2012

File taxes for 2012 Index A Accelerated cost recovery system (ACRS):, ACRS Defined Alternate method, Alternate ACRS Method (Modified Straight Line Method) Classes of recovery property, Classes of Recovery Property Deduction, short tax year, ACRS Deduction in Short Tax Year Defined, ACRS Defined Dispositions, Early dispositions of ACRS property other than 15-, 18-, or 19-year real property. File taxes for 2012 Recovery periods, Recovery Periods Unadjusted basis, Unadjusted Basis B Basis: Adjusted, Adjusted basis. File taxes for 2012 Unadjusted, ACRS, Unadjusted Basis C Changing methods, How To Change Methods D Declining balance method, Declining Balance Method Deduction: ACRS, How To Figure the Deduction How to figure, How To Figure the Deduction Dispositions, Dispositions, Dispositions I Income forecast method, Income Forecast Method L Listed property:, Listed Property Defined 5% owner, 5% owner. File taxes for 2012 Computers, related equipment, Computers and Related Peripheral Equipment Defined, Listed Property Defined Entertainment use, Entertainment Use Leased, Leased Property Other transportation property, Other Property Used for Transportation Predominant use test, Predominant Use Test Qualified business use, Qualified Business Use Recordkeeping, What Records Must Be Kept, Adequate Records Related person, Related person. File taxes for 2012 Reporting on Form 4562, Reporting Information on Form 4562 Use by employee, Employees M Methods of figuring depreciation:, Income Forecast Method ACRS, How To Figure the Deduction Declining Balance, Declining Balance Method Income forecast, Income Forecast Method Straight line, Straight Line Method P Passenger automobile: Defined, Passenger Automobile Defined Predominant use test, applying, Applying the Predominant Use Test Property: ACRS, What Can and Cannot Be Depreciated Under ACRS Intangible, Intangible property. File taxes for 2012 R Recapture: Depreciation, Depreciation Recapture Excess depreciation, listed property, Recapture of excess depreciation. File taxes for 2012 Recordkeeping: For listed property, What Records Must Be Kept S Salvage value, Salvage Value Straight line method, Straight Line Method U Useful life, Useful Life V Videocassettes, Videocassettes. File taxes for 2012 Prev  Up     Home   More Online Publications