Tag Archives: SE

Severance Pay

Severance Pay

Severance Pay means:
an income bridge provided by some employers for employees going from employment to unemployment. Severance pay is taxable in the year received.

Description and Definition of Severance Pay

Money paid by an employer at the end of employment. Severance pay is taxable.

Resources

See Also

Further Reading

Section 1231 Property

Section 1231 Property

Description and Definition of Section 1231 Property

Long term depreciable property used in a trade or business such as equipment, vehicles, and rental real estate. Provided Section 1231 assets are held for the required period of time capital gain treatment is available on a profit upon the sale of the asset while a loss is deductible as an ordinary loss. All Section 1231 gains and losses must be netted.

Resources

See Also

Further Reading

Seizure

Seizure

Seizure of Residence or Business Issue

You may find information about Seizure of Residence Or Business in this Tax Platform of the American Encyclopedia of Law.

Self-Employment Tax

Self-Employment Tax

Self-employment Tax means: a provision for Social Security (old-age, survivor’s and disability insurance) and Medicare hospital insurance for self-employed individuals.Self-employment tax is similar to Social Security and Medicare taxes. It is an amount of tax paid by a taxpayer who is self-employed. The tax rate is a certain percent of self-employment profit. The self-employment tax is calculated on Federal Schedule SE, and reported on Form 1040. The self-employment tax rate is 15.3 percent of self-employment profit. The self-employment tax is calculated on Schedule SE-Self-Employment Tax. The self-employment tax is reported on Form 1040, U.S. Individual Income Tax Return.

Historical Rate

In 1994, the Social Security portion of the self-employment tax was 12.4% on net earnings from self- employment up to $60,600; the Medicare portion, 2.9% on all net earnings. The estimated self-employment tax must be paid quarterly with the estimated income tax. After 1993, all self-employment income was subject to the 2.9% rate for Medicare. Former IRC (check if this IRC provision is current here) § § 1401 and 1402.

Compulsory Payment of Self-Employment Tax

By Julian Block (2013), former IRS Special Agent and tax Editor of Mutual Funds Magazine.

If you had net earnings from self employment of $400 or more you are probably liable to the IRS for self employment tax. Net earnings are calculated by subtracting ordinary and necessary trade or business expenses from your total self employment income. You are self employed for this purpose if you are a sole proprietor, an independent contractor, a member of a partnership, or are otherwise in business for yourself. You can be liable for paying self employment tax to the IRS even if you are currently receiving Social Security benefits.

If you had a small profit or net loss from your business but want to pay into the Social Security system, you may be eligible to file Form 1040, Schedule SE and use one of the two optional methods to compute your net earnings from self employment. See IRS Publication 533, Self-Employment Tax, to see if you qualify to use an optional method. This method may also allow you to qualify for the Earned Income Tax Credit or the Child and Dependent Care Tax Credit.

Maximum Wages Subject to Social Security tax $106,800.00
Social Security tax rate (Employee) 4.20%
Maximum Social Security tax (Employee) $4,486.00
Social Security tax rate (Employer) 6.20%
Maximum Social Security tax (Employer) $6,621.00
Social Security tax rate (Self Employed) 1 10.40%
Maximum Social Security tax (Self Employed) 1 $11,107.00
Maximum Wages Subject to Medicare tax Unlimited
Medicare tax rate (Employee) 1.45%
Medicare tax rate (Employer) 1.45%
Medicare tax rate (Self Employed) 2.90%

Footnotes: 1 Self employed persons are entitled to deduct one-half of their self employment tax on Line 27 of Form 1040.

Self employment tax is computed on Schedule SE of Form 1040 and reported on line 56 of Form 1040. You are also entitled to an income adjustment in figuring adjusted gross income equal to one-half of your self employment tax for the year on line 27 of Form 1040.

If you are an employee of a church or qualified church-controlled organization that elected tax exemption from Social Security tax and Medicare tax, you must pay self employment tax if you are paid $108.28 or more in a tax year. If you are required to pay self employment tax, you must file Form 1040 and attach Schedule SE. For more information on church related income and self employment tax see IRS Publication 517.

Related tax information about self employment tax:

  • Is income from a sole proprietorship taxable?
  • Is income from a part time business taxable?
  • Is the income of an independent contractor taxable?
  • Employee or independent contractor?
  • Is income from my hobby taxable?
  • Are hobby losses tax deductible?
  • Clergy
  • Home Office Tax Deductions
  • Is partnership income taxable?
  • Income Related Questions and Answers

IRS publications about self employment tax:

For additional information about self employment tax refer to IRS Publication 533, Self-Employment Tax, and IRS Publication 334, Tax Guide for Small Business. Also see IRS Publication 17, Your Federal Income Tax.

See Also

See also the entries Income Tax and State Income Tax in the American Encyclopedia of Law.

See Tax Rate and Tax Rate.

Description and Definition of Self Employment Tax

Tax paid by self employed persons on the net income from their trade or business to finance Social Security and Medicare coverage. For 1999 the rate is 15.30% on the first $72,600 of earnings and 2.9% on all amounts over $72,600.

Self-Employment Tax Issue

You may find information about Self-Employment Tax in this Tax Platform of the American Encyclopedia of Law.

Resources

See Also

Further Reading

Section 179 Expense Deduction

Section 179 Expense Deduction

Description and Definition of Section 179 Expense Deduction

Also known as the First Year Expensing, Section 179, lets you treat up to $19,000 of expenditures that normally would be depreciated over a number of years as current business expenses that you can deduct immediately. Larger deductions, up to $37,500, are allowed for qualifying businesses in an enterprise zone. The deduction is not available for real estate. The deduction gradually increases to $25,000 in 2003. You cannot use the Section 179 deduction to the extent that it would cause you to report a loss from your business.

Resources

See Also

Further Reading

Section 457 Plan

Section 457 Plan

Section 457 Plan means:
a deferred-compensation plan established by state and local governments and tax-exempt organizations that allows tax-free deferral of salary up to the lesser of $7,500 or one-third of salary.

Description and Definition of Section 457 Plan

A deferred compensation plan set up by state and local governments and tax exempt organizations that allows tax deferral of salary, generally up to the lesser of $7,500 or one-third of salary.

Resources

See Also

Further Reading

Securities

Securities

Securities means:
any shares of stock in any corporation, certificates of stock or interest in any corporation, notes, bonds, debentures, or evidence of indebtedness, or any evidence of an interest in or right to subscribe to or for the purchase of any of the foregoing.

U.S. and other Developed Countries International Tax Meaning

Documents providing evidence of a share in the capital of a company (e.g. share certificate), or the indebtedness of some person to the holder (e.g. government or corporate bonds) or similar legal rights.

Description and Definition of Securities

Evidences of ownership or debt. Evidences of obligations to pay money or of rights to participate in earnings and profits.

Resources

See Also

Further Reading

Section 1250

Section 1250

Section 1250 means:
the part of the Internal Revenue Code that deals with gains from real estate on which accelerated depreciation has been claimed. Gains on residential properties are generally treated as capital gains except to the extent of the accelerated depreciation claimed. Gains on nonresidential property on which accelerated depreciation has been claimed are all recaptured to the extent of the gain or depreciation, whichever is less.

See also Capital Gain in the American Legal Encyclopedia and Capital Gain in the World Legal Encyclopedia.

See Depreciation in the United States Encyclopedia of Law and Depreciation in the World Encyclopedia of Law.

Description and Definition of Section 1250

This section of the Internal Revenue Code deals with depreciable real estate.

Resources

See Also

Further Reading