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J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return by J.K. Lasser Institute

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45.1 What Is Self-Employment Income?

On Schedule SE, you generally figure self-employment tax on the net profit from your business or profession whether you participate in its activities full or part time. Net profit is generally the amount shown on Line 31 of Schedule C (or Line 3 of Schedule C-EZ) if you are a sole proprietor. If you are a partner, net earnings subject to self-employment tax are taken from Box 14, Schedule K-1, of Form 1065. If you are a farmer, net farm profit is shown on Line 36, Schedule F.

If you have more than one self-employed operation, your net profit from all the operations is combined. A loss in one self-employed business will reduce the income from another business. You file separate Schedules C for each operation and one Schedule SE showing the combined income (less losses, if any).

For self-employment tax purposes, net earnings are not reduced by deductible contributions to your own SEP or Keogh plan (41.4)..

Married couples.

Where you and your spouse each have self-employment income, each spouse must figure separate self-employment income on a separate schedule. Each pays the tax on the separate self-employment income. Both schedules are attached to the joint return.

If you live in a community property state, business income is not treated as community property for self-employment tax purposes. The spouse who is actually carrying on the business is subject to self-employment tax on the earnings.

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