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

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, in-
cluding 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