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 - 2005 Page 6
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7hotel rooms, boarding houses, tourist
employee, including services performed
d. You entered into a covenant not
camps or homes, parking lots,
as a public official (except as a fee
to compete against the company for at
warehouses, and storage garages.
basis government employee as
least a 1-year period beginning on the
explained in item 7 above, under Other
date of termination.
4. Income from the retail sale of
Income and Losses Included in Net
e. The amount of the payment
newspapers and magazines if you were
age 18 or older and kept the profits.
Earnings From Self-Employment).
depended primarily on policies sold by
or credited to your account during the
5. Amounts received by current or
2. Fees received for services
last year of the agreement, or the
former self-employed insurance agents
performed as a notary public. If you
extent to which those policies remain in
and salespersons that are:
have other earnings of $400 or more
force for some period after termination,
subject to SE tax, on the dotted line
a. Paid after retirement but figured
or both.
next to Part V, line 3, enter “Exempt —
as a percentage of commissions
f. The amount of the payment did
Notary” and, in parentheses, the
received from the paying company
not depend to any extent on length of
amount of your net profit as a notary
before retirement,
service or overall earnings from
public from line 2. Subtract that amount
b. Renewal commissions, or
services performed for the company
from the total of lines 1 and 2 and enter
c. Deferred commissions paid after
(regardless of whether eligibility for the
the result on line 3.
retirement for sales made before
payment depended on length of
3. Income you received as a retired
retirement.
service).
partner under a written partnership plan
However, certain termination
that provides lifelong periodic
payments received by former insurance
Line 8b
retirement payments if you had no
salespersons are not included in net
other interest in the partnership and did
earnings from self-employment (as
If you received tips of $20 or more in
not perform services for it during the
explained in item 9 under Income and
any month and did not report the full
year.
Losses Not Included in Net Earnings
amount to your employer, you must file
From Self-Employment on this page).
4. Income from real estate rentals if
Form 4137. Disregard the references to
6. Income of certain crew members
you did not receive the income in the
Form 1040 shown on Form 4137. Also,
of fishing vessels with crews of
course of your trade or business as a
see the instructions for Part I, line 5,
normally fewer than 10 people. See
real estate dealer.
beginning on page 3. Enter on line 8b
Pub. 334 for details.
the amount from Form 4137, line 9.
5. Income from farm rentals
7. Fees as a state or local
(including rentals paid in crop shares) if,
Part VI—Optional
government employee if you were paid
as landlord, you did not materially
only on a fee basis and the job was not
participate in the production or
Methods To Figure Net
covered under a federal-state social
management of the production of farm
security coverage agreement.
products on the land. See Pub. 225 for
Earnings
8. Interest received in the course of
details.
The optional methods may give you
any trade or business, such as interest
6. Dividends on shares of stock and
credit toward your social security
on notes or accounts receivable.
interest on bonds, notes, etc., if you did
coverage even though you have a loss
9. Fees and other payments
not receive the income in the course of
or a small amount of income from
received by you for services as a
your trade or business as a dealer in
self-employment. But the optional
director of a corporation.
stocks or securities.
methods may require you to pay SE tax
10. Recapture amounts under
7. Gain or loss from:
when you would otherwise not be
sections 179 and 280F included in
a. The sale or exchange of a capital
required to pay.
gross income because the business
asset;
If you are filing a joint return and
use of the property dropped to 50% or
b. The sale, exchange, involuntary
both you and your spouse choose to
less. Do not include amounts
conversion, or other disposition of
use an optional method to figure net
recaptured on the disposition of
property unless the property is stock in
earnings from self-employment, you
property. See Form 4797, Sales of
trade or other property that would be
must each complete and attach a
Business Property.
includible in inventory, or held mainly
separate Part VI.
11. Fees you received as a
for sale to customers in the ordinary
professional fiduciary. This may also
You can change the method after
course of the business; or
apply to fees paid to you as a
you file your return. That is, you can
c. Certain transactions in timber,
nonprofessional fiduciary if the fees
change from the regular to the optional
coal, or domestic iron ore.
relate to active participation in the
method or from the optional to the
operation of the estate’s trade or
8. Net operating losses from other
regular method. To do this, file Form
business or the management of an
years.
1040X. For information on the deadline
estate that required extensive
9. Termination payments you
for making this change, see the
management activities over a long
received as a former insurance
Instructions for Form 1040X.
period of time.
salesperson if all of the following
Using the optional methods may
12. Gain or loss from section 1256
conditions are met.
TIP
qualify bona fide residents of
contracts or related property by an
a. The payment was received from
Puerto Rico to claim the
options or commodities dealer in the
an insurance company because of
additional child tax credit or give them a
normal course of dealing in or trading
services you performed as an
larger credit.
section 1256 contracts.
insurance salesperson for the
Farm Optional Method
company.
Income and Losses Not
b. The payment was received after
You may use this method to figure your
termination of your agreement to
Included in Net Earnings
net earnings from farm self-employment
perform services for the company.
if your gross farm income was $2,400
From Self-Employment
c. You did not perform any services
or less or your net farm profits (defined
1. Salaries, fees, etc., subject to
for the company after termination and
below) were less than $1,733. There is
social security or Medicare tax that you
before the end of the year in which you
no limit on how many years you can
received for performing services as an
received the payment.
use this method.
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