2004 Instructions for Form 1040 (ALL) - Supreme Law Firm

Department of the Treasury
Internal Revenue Service
2004 Instructions for Schedule SE (Form 1040)
Use Schedule SE (Form 1040) to figure the tax due on net earnings from self-employment.
Self-Employment 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 old you are and
even if you are already getting social security or Medicare benefits.
Tax
Additional information. See Pub. 533.
Section references are to the Internal Revenue Code.
IRS approval, you will be exempt from of a religious sect recognized as being in
paying SE tax on those net earnings. If you existence at all times since December 31,
General Instructions
had no other income subject to SE tax, 1950, and which has provided a reasonable
What’s New
enter “Exempt—Form 4361” on Form level of living for its dependent members,
1040, line 57. However, if you had other you are exempt from SE tax if you received
For 2004, the maximum amount of
earnings of $400 or more subject to SE tax, IRS approval by filing Form 4029. In this
self-employment income subject to social
see line A at the top of Long Schedule SE. case, do not file Schedule SE. Instead, enter
security tax is $87,900.
“Exempt—Form 4029” on Form 1040,
If you have ever filed Form
Who Must File Schedule SE
line 57. See Pub. 517 for details.
2031 to elect social security
You must file Schedule SE if:
coverage on your earnings as a U.S. Citizens Employed by
• Your net earnings from self-employthat
election.
International Organizations
minister, you cannot revoke Foreign Governments or
ment (see page SE-2) from other than
church employee income were $400 or If you must pay SE tax, include this in-
You must pay SE tax on income you earned
more, or
come on either Short or Long Schedule SE, as a U.S. citizen employed by a foreign
• You had church employee income of line 2. But do not report it on Long Sched- government (or, in certain cases, by a
$108.28 or more—see Employees of ule SE, line 5a; it is not considered church wholly owned instrumentality of a foreign
Churches and Church Organizations betion
under the International Organizations
employee income. Also, include on line 2: government or an international organizalow.
• The rental value of a home or an al-
lowance for a home furnished to you (inthe
United States, Puerto Rico, Guam,
Immunities Act) for services performed in
Who Must Pay
cluding payments for utilities), and
Self-Employment (SE) Tax? • The value of meals and lodging pro- American Samoa, the Commonwealth of
vided to you, your spouse, and your depenthe
Virgin Islands. Report income from this
the Northern Mariana Islands (CNMI), or
Self-Employed Persons
dents for your employer’s convenience.
employment on either Short or Long
You must pay SE tax if you had net earn- However, do not include on line 2: Schedule SE, line 2. If you performed servings
of $400 or more as a self-employed • Retirement benefits you received ices elsewhere as an employee of a foreign
person. If you are in business for yourself from a church plan after retirement, or government or an international organizaor
you are a farmer, you are self-employed.
• The rental value of a home or an altax.
tion, those earnings are exempt from SE
You must also pay SE tax on your share lowance for a home furnished to you (inof
certain partnership income and your cluding payments for utilities) after U.S. Citizens or Resident Aliens
guaranteed payments. See Partnership In- retirement.
come or Loss on page SE-2.
Living Outside the United States
If you were a duly ordained minister
If you are a self-employed U.S. citizen or
Employees of Churches and who was an employee of a church and you
resident alien living outside the United
Church Organizations
must pay SE tax, the unreimbursed busi-
States, in most cases you must pay SE tax.
ness expenses that you incurred as a church
If you had church employee income of
You cannot reduce your foreign earnings
employee are allowed only as an itemized
$108.28 or more, you must pay SE tax.
from self-employment by your foreign
deduction for income tax purposes. Subearned
income exclusion.
Church employee income is wages you retract
the allowable amount from your SE
ceived as an employee (other than as a minearnings
when figuring your SE tax. Exception. The United States has social
ister or member of a religious order) of a
If you were a U.S. citizen or resident security agreements with many countries to
church or qualified church-controlled oreliminate
dual taxes under two social securalien
serving outside the United States as a
ganization that has a certificate in effect
minister or member of a religious order and ity systems. Under these agreements, you
electing an exemption from employer somust
generally pay social security and
you must pay SE tax, you cannot reduce
cial security and Medicare taxes.
your net earnings by the foreign housing Medicare taxes to only the country you live
Ministers and Members of
exclusion or deduction.
in.
Religious Orders
See Pub. 517 for details.
The United States now has social secur-
In most cases, you must pay SE tax on sala-
ity agreements with the following counries
and other income for services you per-
Members of Certain Religious
tries: Australia, Austria, Belgium, Canada,
formed as a minister, a member of a Sects
Chile, Finland, France, Germany, Greece,
religious order who has not taken a vow of If you have conscientious objections to so- Ireland, Italy, Luxembourg, the Netherpoverty,
or a Christian Science practitioner. cial security insurance because of your lands, Norway, Portugal, South Korea,
But if you filed Form 4361 and received membership in and belief in the teachings Spain, Sweden, Switzerland, and the
SE-1
Cat. No. 24334P