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

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United Kingdom. Additional agreements on the other spouse’s Schedule C, C-EZ, or Partnership Income or Loss are expected in the future. If you have ques- F (except income not included in net earntions about international social security ings from self-employment as explained on If you were a general or limited partner in a agreements, you can: partnership, include on line 1 or line 2, page SE-3). Enter on the dotted line to the whichever applies, the amount of net earnleft of Schedule SE, line 3, “Community • Visit the Social Security Administra- ings from self-employment from Schedule tion (SSA) website at www.socialsecurity. Income Taxed to Spouse” and the amount K-1 (Form 1065), box 14, with code A, and gov/international, of any net profit or (loss) allocated to your Schedule K-1 (Form 1065-B), box 9. Genspouse as community income. Combine eral partners should reduce this amount • Call the SSA Office of International Programs at (410) 965-4538 or (410) that amount with the total of lines 1 and 2 before entering it on Schedule SE by any 965-0377 (long-distance charges may ap- and enter the result on line 3. section 179 expense deduction claimed, unply), or reimbursed partnership expenses claimed, • Write to Social Security Administrathe business and you had no other income properties. If you reduce the amount you If you are not the spouse who carried on and depletion claimed on oil and gas tion, Office of International Programs, P.O. Box 17741, Baltimore, MD 21235-7741. subject to SE tax, enter “Exempt Commu- enter on Schedule SE, attach an explananity Income” on Form 1040, line 57; do not tion. If your self-employment income is ex- file Schedule SE. However, if you had empt from SE tax, you should get a stateother earnings subject to SE tax of $400 or If a partner died and the partnership ment from the appropriate agency of the more, enter on the dotted line to the left of continued, include in SE income the foreign country verifying that your Schedule SE, line 3, “Exempt Community deceased’s distributive share of the self-employment income is subject to so- Income” and the amount of net profit or partnership’s ordinary income or loss cial security coverage in that country. If the (loss) from Schedule C, C-EZ, or F alloforeign country will not issue the state- through the end of the month in which he or cated to you as community income. If that she died. See section 1402(f). ment, contact the SSA at the address shown above. Do not complete Schedule SE. Intotal of lines 1 and 2, and enter the result on your spouse were partners in a partnership, amount is a net profit, subtract it from the If you were married and both you and stead, attach a copy of the statement to Form 1040 and enter “Exempt, see attached line 3. If that amount is a loss, treat it as a each of you must pay SE tax on your own statement” on Form 1040, line 57. positive amount, add it to the total of lines 1 share of the partnership income. Each of and 2, and enter the result on line 3. you must file a Schedule SE and report the More Than One Business partnership income or loss on Schedule E If you had two or more businesses, your net Community income included (Form 1040), Part II, for income tax purearnings from self-employment are the on Schedule(s) C, C-EZ, or F poses. combined net earnings from all of your must be divided for income tax purposes on the basis of the SE income belongs to the person who is businesses. If you had a loss in one busithe member of the partnership and cannot community property laws. ness, it reduces the income from another. be treated as SE income by the nonmember Figure the combined SE tax on one Schedspouse even in community property states. ule SE. Joint Returns Fiscal Year Filers Show the name of the spouse with SE income on Schedule SE. If both spouses have SE income, each must file a separate Schedule SE. However, if one spouse qual- ifies to use Short Schedule SE and the other has to use Long Schedule SE, both can use the same form. One spouse should com- If your tax year is a fiscal year, use the tax rate and earnings base that apply at the time the fiscal year begins. Do not prorate the tax or earnings base for a fiscal year that overlaps the date of a rate or earnings base change. Share Farming You are considered self-employed if you produced crops or livestock on someone else’s land for a share of the crops or livestock produced (or a share of the proceeds from the sale of them). This applies even if you paid another person (an agent) to do the actual work or management for you. Report your net earnings for income tax purposes plete the front and the other the back. Specific Instructions on Schedule F (Form 1040) and for SE tax Read the chart on page 1 of Schedule SE to see if you can use Section A, Short Sched- ule SE, or if you must use Section B, Long Schedule SE. For either section, you need to know what to include as net earnings from self-employment. Read the following instructions to see what to include as net earnings and how to fill in either Short or Long Schedule SE, lines 1 and 2. Enter all negative amounts in parentheses. Include the total profits or losses from all businesses on Form 1040, as appropriate. Enter the combined SE tax on Form purposes on Schedule SE. See Pub. 225 for details. 1040, line 57. Other Income and Losses Community Income Included in Net Earnings From Self-Employment In most cases, if any of the income from a business (including farming) is community income, all of the income from that business is SE earnings of the spouse who carried on the business. The facts in each case will determine which spouse carried on the business. If you and your spouse are part- 1. Rental income from a farm if, as landlord, you materially participated in the production or management of the production of farm products on this land. This income is farm earnings. To determine whether you materially participated in farm manageners in a partnership, see Partnership In- Net Earnings From ment or production, do not consider the accome or Loss on this page. tivities of any agent who acted for you. The Self-Employment If you and your spouse had community material participation tests are explained in income and file separate returns, attach What Is Included in Net Pub. 225. Schedule SE to the return of the spouse Earnings From 2. Cash or a payment-in-kind from the with the SE income. Also, attach Department of Agriculture for participating Schedule(s) C, C-EZ, or F to the return of Self-Employment? in a land diversion program. each spouse. In most cases, net earnings include your net 3. Payments for the use of rooms or If you are the spouse who carried on the profit from a farm or nonfarm business. If other space when you also provided subyou business, you must include on Schedule were a partner in a partnership, see the stantial services. Examples are hotel SE, line 3, the net profit or (loss) reported following instructions. rooms, boarding houses, tourist camps or SE-2
homes, parking lots, warehouses, and stor- Earnings From Self-Employment) or as an e. The amount of the payment depended age garages. employee or employee representative primarily on policies sold by or credited to 4. Income from the retail sale of newsagreement, or the extent to which those pol- under the railroad retirement system. your account during the last year of the papers and magazines if you were age 18 or 2. Fees received for services performed older and kept the profits. as a notary public. If you had no other intermination, or both. icies remain in force for some period after 5. Amounts received by current or forf. The amount of the payment did not come subject to SE tax, enter “Exempt-Nomer self-employed insurance agents and tary” on Form 1040, line 57. However, if salespersons that are: you had other earnings of $400 or more depend to any extent on length of service or subject to SE tax, enter “Exempt-Notary” overall earnings from services performed a. Paid after retirement but figured as a and the amount of your net profit as a nopercentage of commissions received from for the company (regardless of whether eli- tary public from Schedule C or Schedule gibility for the payment depended on length the paying company before retirement, C-EZ on the dotted line to the left of Schedb. Renewal commissions, or of service). ule SE, line 3. Subtract that amount from c. Deferred commissions paid after re- the total of lines 1 and 2 and enter the result tirement for sales made before retirement. Statutory Employee Income on line 3. However, certain termination payments re- 3. Income you received as a retired part- If you were required to check the box on ceived by former insurance salespersons ner under a written partnership plan that Schedule C or C-EZ, line 1, because you are not included in net earnings from provides for lifelong periodic retirement were a statutory employee, do not include self-employment (as explained in item 9 payments if you had no other interest in the the net profit or (loss) from that Schedule under Income and Losses Not Included in C, line 31 (or the net profit from Schedule partnership and did not perform services Net Earnings From Self-Employment on C-EZ, line 3), on Short or Long Schedule for it during the year. this page). SE, line 2. But if you file Long Schedule 4. Income from real estate rentals if you 6. Income of certain crew members of SE, be sure to include statutory employee did not receive the income in the course of fishing vessels with crews of normally social security wages and tips from Form a trade or business as a real estate dealer. fewer than 10 people. See Pub. 595 for de- W-2 on line 8a. Report this income on Schedule E. tails. 5. Income from farm rentals (including 7. Fees as a state or local government Optional Methods employee if you were paid only on a fee rentals paid in crop shares) if, as landlord, basis and the job was not covered under a you did not materially participate in the How Can the Optional Methods federal-state social security coverage production or management of the produc- Help You? agreement. tion of farm products on the land. See Pub. Social security coverage. The optional 225 for details. 8. Interest received in the course of any methods may give you credit toward your trade or business, such as interest on notes 6. Dividends on shares of stock and in- social security coverage even though you or accounts receivable. terest on bonds, notes, etc., if you did not have a loss or a small amount of income 9. Fees and other payments received by receive the income in the course of your from self-employment. you for services as a director of a corporasecurities. Earned income credit (EIC). Using the op- trade or business as a dealer in stocks or tion. 10. Recapture amounts under sections 7. Gain or loss from: tional methods may qualify you to claim 179 and 280F that you included in gross the EIC or give you a larger credit if your a. The sale or exchange of a capital asnet earnings from self-employment (deterincome because the business use of the set; property dropped to 50% or less. Do not mined without using the optional methods) b. The sale, exchange, involuntary coninclude amounts you recaptured on the disversion, or other disposition of property un- are less than $1,600. Figure the EIC with position of property. See Form 4797. and without using the optional methods to less the property is stock in trade or other see if the optional methods will benefit you. 11. Fees you received as a professional property that would be includible in invenfiduciary. This may also apply to fees paid tory, or held primarily for sale to customers Additional child tax credit. Using the opto you as a nonprofessional fiduciary if the in the ordinary course of the business; or tional methods may qualify you to claim fees relate to active participation in the opthe additional child tax credit or give you a c. Certain transactions in timber, coal, eration of the estate’s business, or the manlarger credit if your net earnings from or domestic iron ore. agement of an estate that required extensive 8. Net operating losses from other years. self-employment (determined without usmanagement activities over a long period ing the optional methods) are less than of time. 9. Termination payments you received $1,600. Figure the additional child tax 12. Gain or loss from section 1256 con- as a former insurance salesperson if all of credit with and without using the optional tracts or related property by an options or the following conditions are met. methods to see if the optional methods will commodities dealer in the normal course of a. The payment was received from an benefit you. dealing in or trading section 1256 coninsurance company because of services you tracts. performed as an insurance salesperson for Child and dependent care credit. The op- the company. tional methods may help you qualify for b. The payment was received after terthis credit or give you a larger credit if your Income and Losses Not mination of your agreement to perform net earnings from self-employment (deter- Included in Net Earnings services for the company. mined without using the optional methods) are less than $1,600. Figure this credit with From Self-Employment c. You did not perform any services for and without using the optional methods to 1. Salaries, fees, etc., subject to social security or Medicare tax that you received for performing services as an employee, including services performed as a public offi- cial (except as a fee basis government employee as explained in item 7 under Other Income and Losses Included in Net the company after termination and before the end of the year in which you received see if the optional methods will benefit you. the payment. Self-employed health insurance deduction. d. You entered into a covenant not to The optional methods of computing net compete against the company for at least a earnings from self-employment may be 1-year period beginning on the date of ter- used to figure your self-employed health mination. insurance deduction. SE-3
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Note. This booklet does not contain
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What is IRS e-file? It’s the fast
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Tax Return Page Reference Questions
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Quick and Easy Access to Tax Help a
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Topic TeleTax Topics No. Subject No
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Before You Fill In Form 1040 See Ho
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Chart B—For Children and Other De
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Form Item and Box in Which it Shoul
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Line 2 December 31, 2004, you were
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Form 1040—Lines 7 and 8a less tha
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gross income was over $139,500 ($69
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Form 1040—Lines 16a and 16b Age (
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Form 1040—Lines 20a and 20b Socia
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Form 1040—Line 25 IRA Deduction W
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Form 1040—Lines 27 Through 29 for
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Line 35 Include in the total on lin
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Form 1040—Lines 41 and 43 Tax Tab
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Line 44 • Tax-exempt interest fro
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Line 51—Child Tax Credit What Is
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ured the credit. Check box c and en
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Lines 65a and 65b— Earned Income
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Form 1040—Lines 65a and 65b Conti
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Worksheet A—Earned Income Credit
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Form 1040—Lines 65a and 65b Works
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2004 Earned Income Credit (EIC) Tab
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number is 20202086. Do not include
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You cannot sign your return are not
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site at www.aarp.org/taxaide or cal
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2004 Tax Table—Continued If line
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If line 42 (taxable income) is— A
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2004 Instructions for Form 1040 (ALL) - Supreme Law Firm

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