Tax Schedule SE is to be accomplished by self-employed individuals whose net earning is $400 or more ($108.28 or more for church employees). The Tax Schedule SE, also known as Form 1040, is used to determine the tax of self-employed individuals and can be downloaded from the official website of the Internal Revenue Service (IRS). Here’s how to prepare the Schedule SE.
- Find out the section you need to fill out. The Schedule SE has two sections: Short Schedule SE (Section A) and Long Schedule SE (Section B). If you don’t know which section applies to you, look at the flowchart on page one. Simply answer the questions to find out if you are supposed to fill out the Short Schedule or the Long Schedule. Short Schedule is on page one, while the Long Schedule is on page two.
- Supply the important information. Whichever section you need to complete, you have to write your name in the upper field box at the beginning of either section. Supply your security social number in the given field as well.
- Complete the Short Schedule. If you are required to fill out the Short Schedule, you need to supply the needed information on lines 1a, 1b, and 2. Refer to your tax documents to get the required information. On line 3, you have to add up the figures in lines 1a, 1b, and 2. On line 4, calculate your net earnings by multiplying the figure on line 3 by 92.35% (or .9235). Based on the result, calculate your self-employment tax using the percentage detailed on the form. Enter the figure on line 5. Then on line 6, write the deduction from self-employment tax. The deduction can be determined by multiplying the figure on line 5 by 50% (or .50).
- Accomplish the Long Schedule. Just the same, fill out the Long Schedule only if this applies to your situation. Again, provide the required information on lines 1a, 1b, and 2. Add up the figures on the said lines. Write the sum on line 3. Then use the figure on line 3 to calculate the other needed information until you derive the amount you owe in tax.
- Fill out Part II. Make sure to go through Part II of the Long Schedule. Read the instructions carefully. Write on the given lines the result of your calculations.
- Read the instruction sheets. The Schedule SE comes with instruction sheets, which can also be downloaded from the IRS website. Make sure to carefully read the instructions to get a glimpse of the self-employment tax computation. If you prefer, print your own copy. But make sure to use recycled paper.
Filling out the Schedule SE is not so complicated, but to make it a lot easier, make sure to always refer to your other tax forms and documents. You can also ask help from your tax professional if you are not sure you are entering the right figures. Ask help, especially if this is your first encounter with the Schedule SE.