2006 Instructions For Schedule Se (Form 1040)
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4Department of the Treasury
Internal Revenue Service
2006 Instructions for Schedule SE (Form 1040)
Use Schedule SE (Form 1040) to figure the tax due on net earnings from self-employment.
Self-Employment
The Social Security Administration uses the information from Schedule SE to figure your
benefits under the social security program. This tax applies no matter how old you are and
Tax
even if you are already getting social security or Medicare benefits.
Additional information.
See Pub. 225 or Pub. 334.
ganization that has a certificate in effect
minister or member of a religious order and
Section references are to the Internal
electing an exemption from employer so-
you must pay SE tax, you cannot reduce
Revenue Code unless otherwise noted.
cial security and Medicare taxes.
your net earnings by the foreign housing
exclusion or deduction.
Ministers and Members of
What’s New
See Pub. 517 for details.
Religious Orders
Members of Certain Religious
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In most cases, you must pay SE tax on sala-
For 2006, the maximum amount of
Sects
ries and other income for services you per-
self-employment income subject to social
formed as a minister, a member of a
If you have conscientious objections to so-
security tax is $94,200.
religious order who has not taken a vow of
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cial security insurance because of your
If you are a debtor in a chapter 11
poverty, or a Christian Science practitioner.
membership in and belief in the teachings
bankruptcy case, you must pay self-em-
But if you filed Form 4361 and received
of a religious sect recognized as being in
ployment tax on your net earnings from
IRS approval, you will be exempt from
existence at all times since December 31,
self-employment, even though the bank-
paying SE tax on those net earnings. If you
1950, and which has provided a reasonable
ruptcy estate pays the income tax on your
had no other income subject to SE tax,
level of living for its dependent members,
net profit. See Chapter 11 Bankruptcy
enter “Exempt — Form 4361” on Form
you are exempt from SE tax if you received
Cases on page SE-2.
1040, line 58. However, if you had other
IRS approval by filing Form 4029. In this
earnings of $400 or more subject to SE tax,
case, do not file Schedule SE. Instead, enter
see line A at the top of Long Schedule SE.
“Exempt — Form 4029” on Form 1040,
General Instructions
line 58. See Pub. 517 for details.
If you have ever filed Form
U.S. Citizens Employed by
2031 to elect social security
Who Must File Schedule SE
Foreign Governments or
coverage on your earnings as a
minister, you cannot revoke
International Organizations
You must file Schedule SE if:
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that election.
Your net earnings from self-employ-
You must pay SE tax on income you earned
ment (see page SE-2) from other than
If you must pay SE tax, include this in-
as a U.S. citizen employed by a foreign
church employee income were $400 or
government (or, in certain cases, by a
come on either Short or Long Schedule SE,
more, or
line 2. But do not report it on Long Sched-
wholly owned instrumentality of a foreign
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ule SE, line 5a; it is not considered church
government or an international organiza-
You had church employee income of
tion under the International Organizations
employee income. Also, include on line 2:
$108.28 or more — see Employees of
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Immunities Act) for services performed in
Churches and Church Organizations be-
The rental value of a home or an al-
the United States, Puerto Rico, Guam,
low.
lowance for a home furnished to you (in-
American Samoa, the Commonwealth of
cluding payments for utilities), and
Who Must Pay
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the Northern Mariana Islands, or the U.S.
The value of meals and lodging pro-
Virgin Islands. Report income from this
Self-Employment (SE) Tax?
vided to you, your spouse, and your depen-
employment on either Short or Long
dents for your employer’s convenience.
Schedule SE, line 2. If you performed serv-
Self-Employed Persons
However, do not include on line 2:
ices elsewhere as an employee of a foreign
You must pay SE tax if you had net earn-
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government or an international organiza-
Retirement benefits you received
ings of $400 or more as a self-employed
tion, those earnings are exempt from SE
from a church plan after retirement, or
person. If you are in business for yourself
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tax.
The rental value of a home or an al-
or you are a farmer, you are self-employed.
U.S. Citizens or Resident Aliens
lowance for a home furnished to you (in-
You must also pay SE tax on your share
cluding payments for utilities) after
Living Outside the United States
of certain partnership income and your
retirement.
If you are a self-employed U.S. citizen or
guaranteed payments. See Partnership In-
resident alien living outside the United
If you were a duly ordained minister
come or Loss on page SE-2.
who was an employee of a church and you
States, in most cases you must pay SE tax.
Employees of Churches and
You cannot reduce your foreign earnings
must pay SE tax, the unreimbursed busi-
from self-employment by your foreign
Church Organizations
ness expenses that you incurred as a church
employee are allowed only as an itemized
earned income exclusion.
If you had church employee income of
deduction for income tax purposes. Sub-
$108.28 or more, you must pay SE tax.
The United States has social
Exception.
tract the allowable amount from your SE
Church employee income is wages you re-
security agreements with many countries to
earnings when figuring your SE tax.
ceived as an employee (other than as a min-
eliminate dual taxes under two social secur-
ister or member of a religious order) of a
If you were a U.S. citizen or resident
ity systems. Under these agreements, you
church or qualified church-controlled or-
alien serving outside the United States as a
must generally pay social security and
SE-1
Cat. No. 24334P
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