Instructions for Schedule SE 2013 Checklist
Overview of Schedule SE for Tax Year 2013
Schedule SE for tax year 2013 calculates Social Security and Medicare taxes on net earnings from self-employment. If you earn qualifying self-employment income, this schedule determines the self-employment tax owed and how that tax is reported on your individual income tax return.
Schedule SE works in coordination with Form 1040 or Form 1040NR and related income schedules. For 2013, the schedule retained its general structure, but it incorporated year-specific parameters, including the Social Security wage base and the application of the
Additional Medicare Tax on higher earnings.
Overview of 2013 Rules and Notable Parameters
For 2013, the maximum amount of net earnings subject to the Social Security portion of self-employment tax is $113,700. Net earnings above that amount remain subject to the
Medicare portion of self-employment tax without limitation.
An additional Medicare tax of 0.9 percent applies to self-employment income above applicable threshold amounts. This additional tax is calculated separately using Form 8959 and is reflected in the year's overall tax computation.
Income That May Be Subject to Schedule SE
Schedule SE applies only to specific categories of income that qualify as net earnings from self-employment under the 2013 rules. Each income source must be reviewed carefully before inclusion to avoid misreporting.
Common sources of qualifying income include the following
- Net profit or loss reported on Schedule C or Schedule C-EZ from sole proprietorship
activities
- Net farm profit or loss reported on Schedule F
- Guaranteed payments and qualifying trade or business income reported on a
partnership Schedule K-1 (Form 1065) when designated as net earnings from self-employment
- Certain church employee income when not covered by an approved exemption
S Corporation's Schedule K-1 income is generally not subject to self-employment tax. Wages paid by an S corporation are handled through employment tax withholding and are not reported on Schedule SE.
Filing Thresholds and Who Must File
You must file Schedule SE for 2013 if your net earnings from self-employment meet the IRS filing threshold. This determination is based on specific line amounts within Schedule SE rather than a general income concept.
Schedule SE is required if either condition applies. You must file it if line 4 of the Short Schedule
SE or line 4c of the Long Schedule SE shows $400 or more. If you earned $108.28 or more as a church employee and lack an exemption, it's also required. If neither condition applies,
Schedule SE is generally optional.
Filing Checklist for Schedule SE for Tax Year 2013
Step 1: Identify Applicable Income Schedules
Determine whether you have net earnings from Schedule C, Schedule C-EZ, Schedule F, or qualifying partnership income reported on Schedule K-1. Confirm that each source reflects finalized net profit or loss figures before proceeding.
Step 2: Confirm the Filing Requirement
Review Schedule SE lines 4 or 4c to determine whether your net earnings meet the filing threshold. Include church employee income when applicable, using the specific threshold that applies to that category.
Step 3: Determine the Correct Schedule SE Section
Use the Schedule SE flowchart and instructions to determine whether you qualify for Section A, the Short Schedule SE, or must complete Section B, the Long Schedule SE. Eligibility depends on income type, amount, and specific conditions outlined in the Schedule SE instructions.
Step 4: Enter Net Profit or Loss Amounts
Enter net profit or loss from Schedule C line 31, Schedule C-EZ line 3, or Schedule F line 34 into the appropriate line of Schedule SE. Include qualifying partnership guaranteed payments or earnings when required.
Step 5: Compute Net Earnings From Self-Employment
Calculate net earnings from self-employment by applying the 92.35 percent factor to combined qualifying income, subject to applicable adjustments. This step establishes the tax base used to compute Social Security and Medicare taxes.
Step 6: Use the Social Security Wage Base
Apply the $113,700 Social Security wage base limit to the Social Security portion of self-employment tax for 2013. Earnings above this limit are excluded from the Social Security portion but remain subject to Medicare tax.
Step 7: Calculate Total Self-Employment Tax
Complete Schedule SE to calculate the total self-employment tax, which combines the Social
Security and Medicare components. The total tax amount appears on Schedule SE line 12 for
2013.
Step 8: Address Additional Medicare Tax if Required
If your combined wages and self-employment income exceed the applicable threshold, calculate the Additional Medicare Tax using Form 8959. Include the result in your overall tax calculation as required.
Step 9: Transfer Amounts to Form 1040 or 1040NR
Transfer the total self-employment tax from Schedule SE line 12 to the designated self-employment tax line on Form 1040 or Form 1040NR. Transfer the deductible portion of self-employment tax as instructed to reduce adjusted gross income.
- The Nonfarm Optional Method applies only if specific tests are met, including limits on
- The Farm Optional Method applies under separate rules for qualifying farm income.
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 10: Assemble, Sign, and File the Return
Attach Schedule SE to your Form 1040 or Form 1040NR before filing. Sign and date the primary return, assemble schedules in the correct order, and retain copies of all documents for your records.
Optional Methods and Their Effects
Schedule SE includes optional methods that help certain taxpayers qualify for Social Security coverage when their earnings are low. These methods can change reported net earnings and may affect other tax calculations.
The optional methods include the following: net nonfarm profit and its relationship to gross nonfarm income.
Using an optional method can affect eligibility for certain credits and deductions by changing net earnings from self-employment. These effects should be reviewed carefully before selecting an optional method.
Nonresident Aliens and Special Coverage Rules
Self-employed nonresident aliens living in the United States are subject to specific self-employment tax rules. Coverage depends on whether an applicable international social security agreement assigns coverage to the United States.
If U.S. coverage applies, the taxpayer must file Schedule SE with Form 1040NR and pay self-employment tax as required. If coverage does not apply, self-employment tax may not be due.
Schedule Structure and 2013 Clarifications
Although the overall layout of Schedule SE remained consistent in 2013, the year included important computational parameters. The Social Security wage base increased to $113,700, and the Additional Medicare Tax applied to higher levels of earned income.
These items affect tax calculations even though the form’s structure did not undergo a major redesign. Careful attention to year-specific instructions ensures accurate reporting and compliance.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
