Accounting Case 2

SCHEDULE SE (Form 1040)

Department of the Treasury Internal Revenue Service (99)

Self-Employment Tax ▶ Go to www.irs.gov/ScheduleSE for instructions and the latest information.

▶ Attach to Form 1040, 1040-SR, or 1040-NR.

OMB No. 1545-0074

2020 Attachment Sequence No. 17

Name of person with self-employment income (as shown on Form 1040, 1040-SR, or 1040-NR) Social security number of person with self-employment income ▶

Part I Self-Employment Tax Note: If your only income subject to self-employment tax is church employee income, see instructions for how to report your income and the definition of church employee income.

A

If you are a minister, member of a religious order, or Christian Science practitioner and you filed Form 4361, but you had $400 or more of other net earnings from self-employment, check here and continue with Part I . . . . . . . . ▶

Skip lines 1a and 1b if you use the farm optional method in Part II. See instructions.

1 a Net farm profit or (loss) from Schedule F, line 34, and farm partnerships, Schedule K-1 (Form 1065), box 14, code A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1a

b If you received social security retirement or disability benefits, enter the amount of Conservation Reserve Program payments included on Schedule F, line 4b, or listed on Schedule K-1 (Form 1065), box 20, code AH 1b ( )

Skip line 2 if you use the nonfarm optional method in Part II. See instructions.

2

Net profit or (loss) from Schedule C, line 31; and Schedule K-1 (Form 1065), box 14, code A (other than farming). See instructions for other income to report or if you are a minister or member of a religious order 2

3 Combine lines 1a, 1b, and 2 . . . . . . . . . . . . . . . . . . . . . . . . . 3 4 a If line 3 is more than zero, multiply line 3 by 92.35% (0.9235). Otherwise, enter amount from line 3 . 4a

Note: If line 4a is less than $400 due to Conservation Reserve Program payments on line 1b, see instructions. b If you elect one or both of the optional methods, enter the total of lines 15 and 17 here . . . . . 4b c Combine lines 4a and 4b. If less than $400, stop; you don’t owe self-employment tax. Exception: If

less than $400 and you had church employee income, enter -0- and continue . . . . . . . ▶ 4c 5

a Enter your church employee income from Form W-2. See instructions for

definition of church employee income . . . . . . . . . . . . . 5a b Multiply line 5a by 92.35% (0.9235). If less than $100, enter -0- . . . . . . . . . . . . . 5b

6 Add lines 4c and 5b . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 7

Maximum amount of combined wages and self-employment earnings subject to social security tax or the 6.2% portion of the 7.65% railroad retirement (tier 1) tax for 2020 . . . . . . . . . . . 7 137,700

8

a

Total social security wages and tips (total of boxes 3 and 7 on Form(s) W-2) and railroad retirement (tier 1) compensation. If $137,700 or more, skip lines 8b through 10, and go to line 11 . . . . . . . . . . . . . . . 8a

b Unreported tips subject to social security tax from Form 4137, line 10 . . . 8b c Wages subject to social security tax from Form 8919, line 10 . . . . . . 8c d Add lines 8a, 8b, and 8c . . . . . . . . . . . . . . . . . . . . . . . . . . 8d

9 Subtract line 8d from line 7. If zero or less, enter -0- here and on line 10 and go to line 11 . . . ▶ 9 10 Multiply the smaller of line 6 or line 9 by 12.4% (0.124) . . . . . . . . . . . . . . . . 10 11 Multiply line 6 by 2.9% (0.029) . . . . . . . . . . . . . . . . . . . . . . . . 11 12 Self-employment tax. Add lines 10 and 11. Enter here and on Schedule 2 (Form 1040), line 4 . . 12 13 Deduction for one-half of self-employment tax.

Multiply line 12 by 50% (0.50). Enter here and on Schedule 1 (Form 1040), line 14 . . . . . . . . . . . . . . . . . . . . . . . . 13

Part II Optional Methods To Figure Net Earnings (see instructions) Farm Optional Method. You may use this method only if (a) your gross farm income1 wasn’t more than $8,460, or (b) your net farm profits2 were less than $6,107. 14 Maximum income for optional methods . . . . . . . . . . . . . . . . . . . . . 14 5,640 15

Enter the smaller of: two-thirds (2/3) of gross farm income1 (not less than zero) or $5,640. Also, include this amount on line 4b above . . . . . . . . . . . . . . . . . . . . . . . . 15

Nonfarm Optional Method. You may use this method only if (a) your net nonfarm profits3 were less than $6,107 and also less than 72.189% of your gross nonfarm income,4 and (b) you had net earnings from self-employment of at least $400 in 2 of the prior 3 years. Caution: You may use this method no more than five times. 16 Subtract line 15 from line 14 . . . . . . . . . . . . . . . . . . . . . . . . . 16 17 Enter the smaller of: two-thirds (2/3) of gross nonfarm income4 (not less than zero) or the amount on

line 16. Also, include this amount on line 4b above . . . . . . . . . . . . . . . . . 17 1 From Sch. F, line 9; and Sch. K-1 (Form 1065), box 14, code B. 2 From Sch. F, line 34; and Sch. K-1 (Form 1065), box 14, code A—minus the amount

you would have entered on line 1b had you not used the optional method.

3 From Sch. C, line 31; and Sch. K-1 (Form 1065), box 14, code A. 4 From Sch. C, line 7; and Sch. K-1 (Form 1065), box 14, code C.

For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 11358Z Schedule SE (Form 1040) 2020

Schedule SE (Form 1040) 2020 Attachment Sequence No. 17 Page 2 Part III Maximum Deferral of Self-Employment Tax Payments If line 4c is zero, skip lines 18 through 20, and enter -0- on line 21. 18 Enter the portion of line 3 that can be attributed to March 27, 2020, through December 31, 2020 . . 18 19 If line 18 is more than zero, multiply line 18 by 92.35% (0.9235); otherwise, enter the amount from line 18 19 20

Enter the portion of lines 15 and 17 that can be attributed to March 27, 2020, through December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

21 Combine lines 19 and 20 . . . . . . . . . . . . . . . . . . . . . . . . . . 21 If line 5b is zero, skip line 22 and enter -0- on line 23. 22 Enter the portion of line 5a that can be attributed to March 27, 2020, through December 31, 2020 . . 22 23 Multiply line 22 by 92.35% (0.9235) . . . . . . . . . . . . . . . . . . . . . . 23 24 Add lines 21 and 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 25 Enter the smaller of line 9 or line 24 . . . . . . . . . . . . . . . . . . . . . . 25 26

Multiply line 25 by 6.2% (0.062). Enter here and see the instructions for line 12e of Schedule 3 (Form 1040) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Schedule SE (Form 1040) 2020

Version A, Cycle 7

INTERNAL USE ONLY

DRAFT AS OF

July 23, 2020

2020 Schedule SE (Form 1040)

SE:W:CAR:MP

Self-Employment Tax

SCHEDULE SE  (Form 1040)

Department of the Treasury Internal Revenue Service (99)

Self-Employment Tax

▶ Go to www.irs.gov/ScheduleSE for instructions and the latest information.

▶ Attach to Form 1040, 1040-SR, or 1040-NR.         

OMB No. 1545-0074

2020

2020. Cat. No. 11358Z.

Attachment 

Sequence No. 17

Attachment Sequence No. 17. For Paperwork Reduction Act Notice, see your tax return instructions.

Part I

Self-Employment Tax

Note: If your only income subject to self-employment tax is church employee income, see instructions for how to report your income and the definition of church employee income.

A

 

If you are a minister, member of a religious order, or Christian Science practitioner and you filed Form 4361, but you had $400 or more of other net earnings from self-employment, check here and continue with Part I         ▶

Skip lines 1a and 1b if you use the farm optional method in Part II. See instructions.

1

a

Net farm profit or (loss) from Schedule F, line 34, and farm partnerships, Schedule K-1 (Form 1065), box 14, code A           

1a

b

If you received social security retirement or disability benefits, enter the amount of Conservation Reserve Program payments included on Schedule F, line 4b, or listed on Schedule K-1 (Form 1065), box 20, code AH

1b

( )

Skip line 2 if you use the nonfarm optional method in Part II. See instructions.

2

 

Net profit or (loss) from Schedule C, line 31; and Schedule K-1 (Form 1065), box 14, code A (other than farming). See instructions for other income to report or if you are a minister or member of a religious order

2

3

Combine lines 1a, 1b, and 2          

3

4

a

If line 3 is more than zero, multiply line 3 by 92.35% (0.9235). Otherwise, enter amount from line 3          

4a

Note: If line 4a is less than $400 due to Conservation Reserve Program payments on line 1b, see instructions.

b

If you elect one or both of the optional methods, enter the total of lines 15 and 17 here         

4b

c

Combine lines 4a and 4b. If less than $400, stop; you don’t owe self-employment tax. Exception: If less than $400 and you had church employee income, enter -0- and continue          ▶

4c

5

a

Enter your church employee income from Form W-2. See instructions for definition of church employee income          

5a

b

Multiply line 5a by 92.35% (0.9235). If less than $100, enter -0-         

5b

6

Add lines 4c and 5b         

6

7 

 

Maximum amount of combined wages and self-employment earnings subject to social security tax or the 6.2% portion of the 7.65% railroad retirement (tier 1) tax for 2020         

7

8

 

 

a

 

 

Total social security wages and tips (total of boxes 3 and 7 on Form(s) W-2) and railroad retirement (tier 1) compensation. If $137,700 or more, skip lines 8b through 10, and go to line 11                  

8a

b

Unreported tips subject to social security tax from Form 4137, line 10          

8b

c

Wages subject to social security tax from Form 8919, line 10         

8c

d

Add lines 8a, 8b, and 8c         

8d

9

Subtract line 8d from line 7. If zero or less, enter -0- here and on line 10 and go to line 11         ▶

9

10

Multiply the smaller of line 6 or line 9 by 12.4% (0.124)         

10

11

Multiply line 6 by 2.9% (0.029)         

11

12

Self-employment tax. Add lines 10 and 11. Enter here and on Schedule 2 (Form 1040), line 4         

12

13

Deduction for one-half of self-employment tax. 

Multiply line 12 by 50% (0.50). Enter here and on Schedule 1 (Form 1040), line 14          

13

Part II

Optional Methods To Figure Net Earnings  (see instructions) 

Farm Optional Method. You may use this method only if (a) your gross farm income1 wasn’t more than $8,460, or (b) your net farm profits2  were less than $6,107. 

14

Maximum income for optional methods         

14

15 

 

Enter the smaller of: two-thirds (2/3) of gross farm income1 (not less than zero) or $5,640. Also, include this amount on line 4b above         

15

Nonfarm Optional Method. You may use this method only if (a) your net nonfarm profits3 were less than $6,107 and also less than 72.189% of your gross nonfarm income,4  and (b) you had net earnings from self-employment of at least $400 in 2 of the prior 3 years. Caution: You may use this method no more than five times.

16

Subtract line 15 from line 14         

16

17

Enter the smaller of: two-thirds (2/3) of gross nonfarm income4 (not less than zero) or the amount on line 16. Also, include this amount on line 4b above         

17

1 From Sch. F, line 9; and Sch. K-1 (Form 1065), box 14, code B. 

2 From Sch. F, line 34; and Sch. K-1 (Form 1065), box 14, code A—minus the amount you would have entered on line 1b had you not used the optional method. 

3 From Sch. C, line 31; and Sch. K-1 (Form 1065), box 14, code A.

4 From Sch. C, line 7; and Sch. K-1 (Form 1065), box 14, code C.

For Paperwork Reduction Act Notice, see your tax return instructions.

Cat. No. 11358Z

Schedule SE (Form 1040) 2020

Schedule SE (Form 1040) 2020

Attachment Sequence No. 17

Page 2 

Part III

Maximum Deferral of Self-Employment Tax Payments

If line 4c is zero, skip lines 18 through 20, and enter -0- on line 21. 

18

Enter the portion of line 3 that can be attributed to March 27, 2020, through December 31, 2020          

18

19

If line 18 is more than zero, multiply line 18 by 92.35% (0.9235); otherwise, enter the amount from line 18

19

20

 

Enter the portion of lines 15 and 17 that can be attributed to March 27, 2020, through December 31, 2020         

20

21

Combine lines 19 and 20          

21

If line 5b is zero, skip line 22 and enter -0- on line 23. 

22

Enter the portion of line 5a that can be attributed to March 27, 2020, through December 31, 2020         

22

23

Multiply line 22 by 92.35% (0.9235)          

23

24

Add lines 21 and 23         

24

25

Enter the smaller of line 9 or line 24         

25

26

 

Multiply line 25 by 6.2% (0.062). Enter here and see the instructions for line 12e of Schedule 3 (Form 1040)         

26

Schedule SE (Form 1040) 2020