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 - 2010 Page 9

self-employment if your net nonfarm

Use of the nonfarm optional method

earnings from farm and nonfarm

profits were less than $4,851 and also

from nonfarm self-employment is limited

self-employment, but you cannot report

to 5 years. The 5 years do not have to be

less than your actual net earnings from

less than 72.189% of your gross nonfarm

consecutive.

nonfarm self-employment alone.

income. Net nonfarm profits are the total

of the amounts from Part IV, line 27, and

If you use both methods to figure net

Under this method, report in Part VI,

your distributive share from other than

earnings from self-employment, you

line 4, the smaller of: two-thirds of your

farm partnerships.

cannot report more than $4,480 of net

gross nonfarm income (not less than

earnings from self-employment.

zero), or the amount in Part VI, line 3. But

To use this method, you also must be

you cannot report less than your actual

Completing Your Return

regularly self-employed. You meet this

net earnings from nonfarm

requirement if your actual net earnings

self-employment.

Third Party Designee

from self-employment were $400 or more

Figure your share of gross income

in 2 of the 3 years preceding the year you

If you want to allow your preparer, a

from a nonfarm partnership in the same

use the nonfarm optional method. The net

friend, family member, or any other

manner as a farm partnership. For details,

earnings of $400 or more could be from

person you choose to discuss your 2010

see Farm Optional Method on page SS-8.

either farm or nonfarm earnings or both.

tax return with the IRS, check the “Yes”

Using Both Optional Methods

The net earnings include your distributive

box in the “Third Party Designee” area on

share of partnership income or loss

If you can use both optional methods, you

page 1 of your return. Also, enter the

subject to SE tax.

can report less than your total actual net

designee’s name, phone number, and

Self-Employed Health Insurance Deduction Worksheet—Part V, Line 1b

Keep for Your Records

Before you begin:

1. If you are claiming the health coverage tax credit, complete Form 8885, Health Coverage Tax Credit, before you figure this deduction. See

the instructions for Part I, line 9, on page SS-4.

2. Use the worksheet in chapter 6 of Pub. 535, Business Expenses, to figure your deduction, if, during 2010:

a. You had more than one health plan and each plan was established under a different business, or

b. You paid premiums on a qualified long-term care insurance contract for you, your spouse, or your dependents.

Caution: In order to claim the self-employed health insurance deduction on line 1b, you must have an entry on line 1a and/or line 2 of Form

1040-SS, Part V.

Enter the total amount paid in 2010 for health insurance coverage established under your business* for 2010 for you,

your spouse, and anyone you could claim as a dependent if you were filing Form 1040 (see page SS-8). Effective

March 30, 2010, your insurance can also cover your child who was under age 27 at the end of 2010, even if the child

was not your dependent.

Do not include the following.

•

Amounts for any month you were eligible to participate in a health plan subsidized by your or your spouse’s

employer or, effective March 30, 2010, the employer of either your dependent or your child who was under the age of

27 at the end of 2010 (see page SS-8).

•

Any amounts paid from retirement plan distributions that were nontaxable because you are a retired public safety

officer.

•

Any amount you entered on Form 8885, line 4.

•

Any qualified health insurance premiums you paid to “U.S. Treasury-HCTC.”

•

Any health coverage tax credit advance payments shown in box 1 of Form 1099-H.

•

Any payments for qualified long-term care insurance (see Before you begin above) . . . . . . . . . . . . . . . . . . . . . .

Enter your net profit** and any other earned income*** from the business under which the insurance plan is

established. Do not include in your net profit any Conservation Reserve Program payments entered in Part V,

line 1b. If the business is an S corporation, skip to line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3a. If you pay self-employment tax, complete a separate Form 1040-SS, Part V, as a worksheet

for purposes of this line. When completing line 1b of the worksheet Part V, treat the amount of

your self-employed health insurance deduction as zero. Enter on this line the amount shown

3a.

on line 12 of your Part V worksheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3b. Multiply line 3a by 50% (.50) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3b.

Subtract line 3b from line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Enter your Medicare wages (box 5 of Form W-2, W-2CM, W-2GU, or W-2VI) from an S corporation in which

you are a more-than-2% shareholder and in which the insurance plan is established . . . . . . . . . . . . . . . . . . . . . . .

Self-employed health insurance deduction.

Is there an entry on line 4?

Yes. Enter the smaller of line 1 or line 4 here. Also enter “SEHI” and this amount on the dotted line next to

Form 1040-SS, Part V, line 1b

No. Enter the smaller of line 1 or line 5 here. Also enter “SEHI” and this amount on the dotted line next to

Form 1040-SS, Part V, line 1b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

*This includes a sole proprietorship, a partnership, or an S corporation in which you were a more-than-2% shareholder.

**If you used either optional method to figure your net earnings from self-employment from the business under which the insurance plan is established, do not

enter your net profit from the business. Instead, enter the amount attributable to that business from Form 1040-SS, Part VI, line 2 or line 4.

***Earned income includes net earnings and gains from the sale, transfer, or licensing of property you created. However, it does not include capital gain

income.

SS-9

Instructions for Form 1040-SS (2010)