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 - 2001 Page 5
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8extent to which those policies remain in
and “Part V” on the dotted line next to
earnings from self-employment,
force for some period after termination,
line 11.
complete Part VI.
or both.
Note: Using the optional methods may
Line 13
6. The amount of the payment did
qualify bona fide residents of Puerto
not depend to any extent on length of
If either of the following applies, see
Rico to claim the additional child tax
service or overall earnings from
Schedule H (Form 1040), Household
credit or give them a larger credit.
services performed for the company
Employment Taxes, and its instructions
(regardless of whether eligibility for the
Farm Optional Method
to find out if you owe these taxes.
payment depended on length of
1. You paid any one household
You may use this method to figure your
service).
employee cash wages of $1,300 or
net earnings from farm self-employment
more in 2001.
if your gross farm income was $2,400
Line 8b
2. You paid total cash wages of
or less or your net farm profits (defined
If you received tips of $20 or more in
$1,000 or more in any calendar quarter
on this page) were less than $1,733.
any month and did not report the full
of 2000 or 2001 to household
There is no limit on how many years
amount to your employer, you must file
employees.
you can use this method.
Form 4137, Social Security and
Under this method, you report on
Medicare Tax on Unreported Tip
Line 15
line 2, two-thirds of your gross farm
Income. Disregard the references to
income, up to $1,600, as your net
Enter any estimated tax payments you
Form 1040 shown on Form 4137. Also
earnings. This method can increase or
made for 2001 including any
see the instructions for line 12 below.
decrease your net self-employment
overpayment from your 2000 return that
Enter on line 8b the amount from Form
farm earnings even if the farming
you applied to your 2001 estimated tax.
4137, line 9.
business had a loss.
If you or your spouse paid separate
estimated tax but are now filing a joint
Line 12
You may change the method after
return, add the amounts you each paid
you file your return. That is, you can
Employee social security and
and enter the total on line 15. If you and
change from the regular to the optional
Medicare tax on tips not reported to
your spouse paid joint estimated tax but
method or from the optional to the
employer. Complete Form 4137 if you
are now filing separate returns, you can
regular method.
received cash and charge tips of $20 or
divide the amount paid in any way you
For a farm partnership, figure your
more in any month and did not report
choose as long as you both agree. If
share of gross income based on the
all of those tips to your employer. On
you cannot agree, you must divide the
partnership agreement. With
the dotted line next to line 11 of Form
payments in proportion to each
guaranteed payments, your share of
1040-SS, write “Tax on Tips,” and the
spouse’s individual tax as shown on
the partnership’s gross income is your
amount of tax due (from Form 4137,
your separate returns for 2001. For an
guaranteed payments plus your share
line 12). Be sure to include the amount
example of how to do this, see Pub.
of the gross income after it is reduced
due in the total on Form 1040-SS, line
505, Tax Withholding and Estimated
by all guaranteed payments made by
12. Attach to Form 1040-SS the
Tax.
the partnership. If you were a limited
completed Form 4137 and Schedule U
partner, include only guaranteed
Line 16
(Form 1040) (found at the bottom of
payments for services you actually
Form 4137).
If you, or your spouse if filing a joint
rendered to or on behalf of the
return, had more than one employer for
Uncollected employee social
partnership.
2001 and total wages of more than
security and Medicare tax on tips. If
Net farm profits is the total of the
$80,400, too much social security tax
you did not have enough wages to
amounts from Part III, line 36, and your
may have been withheld. You can take
cover the social security and Medicare
distributive share from farm
a credit on this line for the amount
tax due on tips you reported to your
partnerships.
withheld in excess of $4,984.80. But if
employer, the amount of tax due should
any one employer withheld more than
be identified with codes A and B in box
Nonfarm Optional Method
$4,984.80, you must ask that employer
12 of your Form W-2AS, W-2GU, or
You may be able to use this method to
to refund the excess to you. You cannot
W-2VI. Include this tax in the total for
figure your net earnings from nonfarm
claim it on Form 1040-SS. Figure this
line 12. Enter the amount of this tax
self-employment if your net nonfarm
amount separately for you and your
and “Uncollected Tax” on the dotted
profits (defined on page 6) were less
spouse. You must attach Form W-2AS,
line next to line 11.
than $1,733 and also less than
W-2CM, W-2GU, W-2VI, or 499R-2/
Uncollected employee social
72.189% of your gross nonfarm
W-2PR.
security and Medicare tax on
income. To use this method, you also
group-term life insurance. If you had
must be regularly self-employed. You
Parts II and VI—Optional
group-term life insurance through a
meet this requirement if your actual net
Methods To Figure Net
former employer, you may have to pay
earnings from self-employment were
social security and Medicare tax on part
$400 or more in 2 of the 3 years
Earnings
of the cost of the life insurance. The
preceding the year you use the
amount of tax due should be identified
The optional methods may give you
nonfarm method. The net earnings of
with codes M and N in box 12 of your
credit toward your social security
$400 or more could be from either farm
Form W-2AS, W-2GU, or W-2VI.
coverage even though you have a loss
or nonfarm earnings or both. The net
Include this tax in the total for line 12.
or a small amount of income from
earnings include your distributive share
Enter the amount of this tax and
self-employment. But the optional
of partnership income or loss subject to
“Uncollected Tax” on the dotted line
methods may require you to pay SE tax
SE tax. Use of this method is limited to
next to line 11.
when you would otherwise not be
5 years, which do not have to be
required to pay.
consecutive.
Joint return. If your spouse has
self-employment tax from Part V, line
If you are filing a joint return and
Under this method, you report on
12, include that tax in the total for Part
your spouse chooses to use the
line 4, two-thirds of your gross nonfarm
I, line 12. Enter the amount of this tax
optional method to figure his or her net
income, up to $1,600, as your net
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