Wiley Tax Preparer: A Guide to Form 1040

CHAPTER 35

Other Taxes

A taxpayer may owe other types of taxes in addition to the regular tax and alternative minimum tax. A taxpayer who is self-employed may be subject to self-employment taxes (Chapter 11). A taxpayer earning tips that are not reported to the employer may also owe Social Security and Medicare taxes on these unreported tips (Chapter 4).

A taxpayer may owe penalties related to qualified retirement plans, individual retirement accounts (IRAs), and other tax-advantaged accounts, which are paid as additional taxes (Chapter 8). There also may be a recapture of previously claimed tax benefits for an education credit (Chapter 30) and the first-time homebuyer credit (Chapter 14) for certain taxpayers. Those who engage household help may owe employment taxes for their workers.

These other taxes are additional amounts owed and are reported in the Other Taxes section of Form 1040, U.S. Individual Income Tax Return.

Self-Employment Tax

To ensure that self-employed individuals earn credits for Social Security and Medicare coverage, they pay self-employment (SE) tax. This tax, which is required under the Self-Employment Contributions Act (SECA), reflects both the employer and employee share of the contribution to Social Security and Medicare, even though a self-employed individual is neither an employer of him- or herself nor an employee.

The net earnings from self-employment, which are the profits reported on Schedule C (Form 1040), Profit or Loss From Business, or Schedule ...