Instructions For Form 1040-Ss - U.s. Self-Employment Tax Return (Including The Additional Child Tax Credit For Bona Fide Residents Of Puerto Rico) - Internal Revenue Service - 2008 Page 8
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8You can change the method after you
Under this method, report in Part VI,
criminal prosecution. We may also have
file your return. That is, you can change
line 4, two-thirds of your gross nonfarm
to disallow any deductions shown on the
from the regular to the optional method or
income, up to $4,200, as your net
tax return. This could make the tax higher
from the optional to the regular method.
earnings. But you cannot report less than
or delay any refund, and the calculation of
To do this, file a new Form 1040-SS. See
your actual net earnings from nonfarm
your social security benefits may be
the instructions under Amended returns
self-employment.
affected. Interest may also be charged.
on page SS-1.
Figure your share of gross income
Generally, tax returns and return
from a nonfarm partnership in the same
information are confidential, as stated in
Using the optional methods may
manner as a farm partnership. For details,
section 6103. However, section 6103
TIP
qualify bona fide residents of
see Farm Optional Method on this page.
allows or requires the IRS to disclose or
Puerto Rico to claim the additional
give the information shown on your tax
child tax credit or give them a larger
Using Both Optional Methods
return to others as described in the Code.
credit.
If you can use both methods, you can
For example, we may disclose your tax
Farm Optional Method
report less than your total actual net
information to the SSA for use in
earnings from farm and nonfarm
You may use this method to figure your
calculating your social security benefits;
self-employment, but you cannot report
net earnings from farm self-employment if
to the Department of Justice, to enforce
less than your actual net earnings from
your gross farm income was $6,300 or
the tax laws, both civil and criminal; and
nonfarm self-employment alone.
less or your net farm profits were less
to cities, states, the District of Columbia,
than $4,548. Net farm profits are the total
If you use both methods to figure net
U.S. commonwealths or possessions, and
earnings from self-employment, you
certain foreign governments to carry out
of the amounts from Part III, line 36, and
your distributive share from farm
cannot report more than $4,200 of net
their tax laws.
earnings from self-employment.
partnerships — minus the amount you
We may disclose your tax information
would have entered in Part V, line 1b, had
to other persons as necessary to obtain
Disclosure, Privacy Act, and
you not used the optional method.
information which we cannot get in any
Paperwork Reduction Act Notice. The
There is no limit on how many years
other way in order to determine the
IRS Restructuring and Reform Act of
you can use this method.
amount of or to collect the tax you owe.
1998, the Privacy Act of 1974, and
We may disclose your tax information to
Under this method, report in Part VI,
Paperwork Reduction Act of 1980 require
the Comptroller General of the United
line 2, two-thirds of your gross farm
that when we ask you for information we
States to permit the Comptroller General
income, up to $4,200, as your net
must first tell you our legal right to ask for
to review the Internal Revenue Service.
earnings. This method can increase or
the information, why we are asking for it,
We may disclose your tax information to
decrease your net self-employment farm
and how it will be used. We must also tell
Committees of Congress; federal, state,
earnings. You can use this method even if
you what could happen if we do not
and local child support agencies; and to
your farming business had a loss.
receive it and whether your response is
other federal agencies for the purposes of
voluntary, required to obtain a benefit, or
For a farm partnership, figure your
determining entitlement for benefits or the
mandatory under the law.
share of gross income based on the
eligibility for and the repayment of loans.
partnership agreement. With guaranteed
This notice applies to all papers you
We may also disclose this information to
payments, your share of the partnership’s
file with us, including this tax return. It
other countries under a tax treaty, or to
gross income is your guaranteed
also applies to any questions we need to
federal and state agencies to enforce
payments plus your share of the gross
ask you so we can complete, correct, or
federal nontax criminal laws, or to federal
income after it is reduced by all
process your return; figure your tax; and
law enforcement and intelligence
guaranteed payments made by the
collect tax, interest, or penalties.
agencies to combat terrorism.
partnership. If you were a limited partner,
Our legal right to ask for information is
Keep this notice with your records. It
include only guaranteed payments for
sections 6001, 6011, and 7651 and their
may help you if we ask you for other
services you actually rendered to or on
regulations. They say that you must file a
information. If you have questions about
behalf of the partnership.
return or statement with the IRS and pay
the rules for filing and giving information,
Nonfarm Optional Method
to the United States Treasury any tax for
call or visit any IRS office.
which you are liable. Your response is
You may be able to use this method to
The time needed to complete and file
mandatory under these sections. Section
figure your net earnings from nonfarm
this form will vary depending on individual
6109 requires that you provide your
self-employment if your net nonfarm
circumstances. The estimated average
identifying number. This is so we know
profits were less than $4,548 and also
time is:
who you are, and can process your return
less than 72.189% of your gross nonfarm
and other papers. You must fill in all parts
income. Net nonfarm profits are the total
Recordkeeping . . . . . . . .
5 hr., 27 min.
of the tax form that apply to you.
of the amounts from Part IV, line 27, and
Learning about the law or
You are not required to provide the
your distributive share from other than
the form . . . . . . . . . . . . .
59 min.
information requested on a form that is
farm partnerships.
Preparing the form . . . . . .
3 hr., 46 min.
subject to the Paperwork Reduction Act
Copying, assembling, and
To use this method, you also must be
unless the form displays a valid OMB
sending the form to the IRS
1 hr., 3 min.
regularly self-employed. You meet this
control number. Books or records relating
requirement if your actual net earnings
If you have comments concerning the
to a form or its instructions must be
from self-employment were $400 or more
accuracy of these time estimates or
retained as long as their contents may
in 2 of the 3 years preceding the year you
suggestions for making this form simpler,
become material in the administration of
use the nonfarm optional method. The net
we would be happy to hear from you. You
any Internal Revenue law.
earnings of $400 or more could be from
can write to the Internal Revenue Service,
We ask for tax return information to
either farm or nonfarm earnings or both.
Tax Products Coordinating Committee,
carry out the tax laws of the United
The net earnings include your distributive
SE:W:CAR:MP:T:T:SP, 1111 Constitution
States. We need it to figure and collect
share of partnership income or loss
Ave. NW, IR-6526, Washington, DC
the right amount of tax.
subject to SE tax.
20224. Do not send the form to this
If you do not file a return, do not
Use of the nonfarm optional method
address. Instead, see Where To File on
provide the information we ask for, or
from nonfarm self-employment is limited
page SS-1.
provide fraudulent information, you may
to 5 years. The 5 years do not have to be
be charged penalties and be subject to
consecutive.
SS-8
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