Publication 225
taxmap/pubs/p225-049.htm#en_us_publink1000218717taxmap/pubs/p225-049.htm#en_us_publink1000250759Self-employed health insurance deduction.
(p71)For tax years beginning after 2010, you cannot deduct any self-employed health insurance deduction you report on Form 1040, line 29, from self-employment earnings. See the Instructions for Schedule SE (Form
1040).
For tax years beginning in 2011, the social security part of the self-employment tax decreases from 12.4% to 10.4%. The Medicare part of the tax remains at 2.9%. As a result, the self-employment tax is reduced from 15.3% to
13.3%.
Maximum net earnings.
(p72)The maximum net self-employment earnings subject to the social security part (10.4%) of the self-employment tax remains $106,800 for 2011. There is no maximum limit on earnings subject to the Medicare part (2.9%).
Maximum net earnings.
(p72)The maximum net self-employment earnings subject to the social security part of the self-employment tax for 2012 will be discussed in the 2011 Publication 334. The Medicare part of the tax remains at
2.9%.
Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. It is similar to the social security and Medicare taxes withheld from the pay of most wage
earners.
You usually have to pay SE tax if you are self-employed. You are usually self-employed if you operate your own farm on land you either own or rent. You have to figure SE tax on Schedule SE (Form
1040).
Farmers who have employees may have to pay the employer's share of social security and Medicare taxes, as well. See
chapter 13 for information on employment taxes.
For tax years beginning in 2011, the self-employment tax rate is 13.3%. The rate consists of two parts: 10.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).
taxmap/pubs/p225-049.htm#TXMP7ca71f65Useful items
You may want to see:
Publication 541 Partnerships Form (and Instructions) 1040:
U.S. Individual Income Tax Return Sch F (Form 1040):
Profit or Loss From Farming Sch SE (Form 1040):
Self-Employment Tax 1065:
U.S. Return of Partnership Income Sch K-1 (Form 1065):
Partner's Share of Income, Deductions, Credits, etc. See
chapter 16 for information about getting publications and forms.
Social security benefits are available to self-employed persons just as they are to wage earners. Your payments of SE tax contribute to your coverage under the social security system. Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare)
benefits.
taxmap/pubs/p225-049.htm#en_us_publink1000218724You must be insured under the social security system before you begin receiving social security benefits. You are insured if you have the required number of credits (also called quarters of coverage).
taxmap/pubs/p225-049.htm#en_us_publink1000218725You can earn a maximum of four credits per year. For 2011, you earn one credit for each $1,120 of combined wages and self-employment earnings subject to social security tax. You need $4,480 ($1,120 × 4) of combined wages and self-employment earnings subject to social security tax to earn four credits in 2011. It does not matter whether the income is earned in 1 quarter or is spread over 2 or more quarters.
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.socialsecurity.gov.
 | Making false statements to get or to increase social security benefits may subject you to penalties.
|
taxmap/pubs/p225-049.htm#en_us_publink1000218727Generally, 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.
| 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.
The SSA will not change its records
to increase your self-employment earnings after the SSA time limit listed above. |
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