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2005 Tax Year |
Keyword: Schedule C or C-EZ
This is archived information that pertains only to the 2005 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
My son is a newspaper carrier. I would like to know if this income
is subject to Social Security and Medicare tax and if I must file a Schedule
C for him?
Your son may be liable to pay into the Social Security and Medicare system
by paying self-employment tax. However, if your son is under the age of 18,
he is exempt from self-employment tax. His employer should complete the other
income box on Form 1099-MISC (PDF) , Miscellaneous
Income. Persons engaged in the trade or business of delivering or distributing
newspapers or shopping news (including any services directly related to such
delivery or distribution) are considered by statute as non employees and are
treated as self-employed for all Federal tax purposes, including income and
employment taxes. Only if they receive income based on number of sales or
distribution volume and work under a written contract that says the carrier
will not be treated as an employee for federal employment tax purposes.
Independent contractors report their income on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship) ,
or you may qualify to use Form 1040, Schedule C-EZ (PDF), Net
Profit from Business . See Form 1040, Schedule SE (PDF), Self-Employment
Tax , which must be filed if net earnings from self-employment are $400
or more.
References:
- Publication 15 , Circular E, Employer's Tax Guide
- Form 1040, Schedule C (PDF), Profit or
Loss from Business (Sole Proprietorship)
- Form 1040, Schedule C-EZ (PDF), Net
Profit from Business
- Form 1040, Schedule C Instructions
- Form 1040, Schedule SE (PDF), Self-Employment
Tax
- Form 1040, Schedule SE Instructions
- Publication 334, Tax Guide for Small Business
- Tax information for
Business
- Form 1099-MISC (PDF) , Miscellaneous
Income
- Publication 15-A (PDF) , Employer's Supplemental
Tax Guide
I am self-employed. How do I report my income and how do I pay Medicare
and social security taxes?
Your self-employment income is reported on Form 1040, Schedule C (PDF), Profit or Loss from Business, or on Form 1040, Schedule C-EZ (PDF), Net Profit from Business.
Your Medicare and social security taxes are reported on Form 1040, Schedule SE (PDF), Self-Employment Tax.
As a self-employed person, you pay your Medicare and social security taxes
the same way you pay your income taxes. If you expect to owe less than $1,000
in total taxes, you can pay them when you file your income tax return. If
you expect to owe $1,000 or more in total taxes, you will need to make estimated
tax payments. These payments are made quarterly using Form 1040-ES (PDF), Estimated Tax for Individuals. You will need to
figure these taxes at the beginning of the year. To learn about figuring and
making estimated tax payments, please refer to Publication 505, Tax
Withholding and Estimated Tax.
If you have run a small business in the past, but this year there
is no income or expenses, is it necessary to file a Schedule C?
If your sole proprietorship business is inactive during the full year,
it is not necessary to file a Form 1040, Schedule C (PDF), Profit
or Loss from Business, for that year.
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