 Income tax 2021-2022, reporting self-employment tax. Get ready to get income to the max, diving into income tax 2021-2022. Most of this information can be found in Publication 334 Tax Guide for Small Business Tax Year 2021 on the IRS website at irs.gov, irs.gov, income tax formula, focusing in on the other taxes down here, specifically looking at the self-employment tax. And traditionally, or most often, it would be applied to something like the Schedule C business, which would be reported on a separate schedule that would have, in essence, an income statement, income and expenses, the net then rolling into line one income and also typically being subject to the self-employment tax. This is page one of the Form 1040. The Schedule C would basically roll into the Schedule 1. The net then rolling in here to page one of the Form 1040, line number eight. We also see here that half of the self-employment tax is deducted as an above the line deduction or adjustments to income on line number 10. This is the Schedule C, the profit or loss from business. Basically the income statement, the net of which would roll into the income line and possibly be subject to the self-employment tax. This is the Schedule SE, the self-employment tax, noting that the self-employment is similar to or the equivalent of, in essence, the payroll taxes that would be given in a payroll situation to this situation where you're taking the net income of something like the Schedule C, which would be subject to the tax, self-employment tax, social security and Medicare, being those taxes that we then are applying to it. So how are we going to report it? Reporting self-employment tax. You're going to be using the Schedule SE, Form 1040 to figure and report your SE tax, self-employment tax, then enter the SE tax, self-employment tax, on line 4 of Schedule 2, Form 1040 and attach Schedule SE to Form 1040 or Form 1040 SR. If you have to pay SE tax, self-employment tax, you must file Form 1040 or 1040 SR with Schedule SE attached, even if you do not otherwise have to file a federal income tax return. So note, if your income is below a certain threshold, for example, then you may not generally need to file an income tax return, because you don't have income tax, but because you have to report the self-employment tax now. And just note, when we usually think about a Form 1040, we usually think about the income tax as the primary thing that we're reporting. The self-employment tax, if we were a W-2 like employee, would be in the form of payroll taxes, which have already been taken out and paid for us on our behalf by the employer. Therefore, it's reported on the W-2, but not something that we typically have to do anything with most of the time on the Form 1040, except basically reported, you know, it's reported on the W-2. But with the self-employment tax, we don't have anybody making the withholdings for us, and therefore we've got to actually calculate that tax and possibly pay that tax on the Form 1040. So if we owe self-employment tax, even if we weren't required to file the return for federal income taxes, we've got to file it to figure the self-employment tax so that we can pay it during the filing of the tax return. So if we have a joint return, so joint return, married filing joint, in other words, even if you file a joint return, you cannot file a joint schedule SE self-employment. So you might say, I file a joint return. So normally you would think, well, can't I just combine the joint SE into one self-employment tax? The problem with that from the government side of things is even with married individuals, which we kind of think of as like one taxable entity, at least from a tax standpoint, you've got to apply out the benefits that you might be receiving, say from self-employment, I mean, say from social security, for example, when you're going to receive the benefits, they have to know whose social security number, who are they going to apply that to. And so that becomes a problem with reporting these and making sure that it's allocated to the proper person because that's going to affect the amount of benefits that they're going to get after retirement years from say like social security. So this is true whether one spouse or both spouses have earnings subject to the self-employment tax. If both of you have earnings subject to self-employment tax, each of you must complete a separate schedule SE, attach both schedules to the joint return. Again, you might say, why does it matter? Because if I just put it on one schedule SE, I'm going to pay the same amount of tax. It matters in part because when you get the benefits back, it's going to be based on who put the money in, applied to the social security number, not applied to the tax return. And so they have to have it broken out by individual that's playing in. More than one business, if you have more than one trader business, you must combine the net profit or loss from each business to figure your self-employment tax. So you're going to have to basically combine them together because you've got those things like the caps that are on the social security. So that if you have two businesses that are feeding in, then you're going to have that one cap that needs to apply. So a law and obviously software helps with this. If you have a loss from one business will reduce your profit from another business, file one schedule SE showing the earnings from self-employment, but file a separate schedule C or F for each business. So now you've got two businesses that are applied, for example, to one individual. You might have two schedule C's that you're going to be reporting, but possibly just one schedule SE. In this case, you only need one schedule SE because the income feeding into it that you're going to calculate the self-employment tax on is allocated to the same individual as opposed to when we needed the two schedule SE's. When we had two individuals like in that married couple situation where they have to report their income on separate SE's because the benefits need to be applied for social security numbers. So example, you are the sole proprietor of two separate businesses. You operate a restaurant that made a net profit of 25,000. You also have a cabinet making business that had a net loss of 500. You must file a schedule C for the restaurant showing net profits of 25,000 and another schedule C for the cabinet business showing your net loss of 500. You will file one schedule SE for the two businesses showing total earnings subject to SE tax of the 24,500.