Instructions For Form 1040-Ss - U.s. Self-Employment Tax Return (Including The Additional Child Tax Credit For Bona Fide Residents Of Puerto Rico) - Internal Revenue Service - 2010 Page 8
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11Line 8c
which those policies remain in force for
eligible for any month or part of a month
some period after termination, or both.
to participate in any subsidized health
If you are an employee who received
f. The amount of the payment did not
plan maintained by the employer of either
wages from an employer who did not
depend to any extent on length of service
your dependent or your child who was
withhold social security and Medicare tax,
or overall earnings from services
under age 27 at the end of 2010, do not
you must file Form 8919 with Form
performed for the company (regardless of
use amounts paid for coverage for that
1040-SS (see instructions for Part I, line
whether eligibility for the payment
month to figure the deduction.These rules
5, on page SS-4). Enter on line 8c the
depended on length of service).
are applied separately to plans that
amount from Form 8919, line 10.
provide long-term care insurance and
Line 1b
plans that do not provide long-term care
Part VI—Optional Methods
insurance.
For 2010, there are two deductions that
To Figure Net Earnings
will be entered on line 1b.
Example. If you were eligible to
•
Self-employed health insurance
The optional methods may give you credit
participate in a subsidized health plan
premiums.
toward your social security coverage even
maintained by your spouse’s employer
•
Conservation Reserve Program
though you have a loss or a small amount
from September 20 through December
payments.
of income from self-employment. But the
31, you cannot use amounts paid for
optional methods may require you to pay
Self-Employed Health Insurance
health insurance coverage for September
SE tax when you would otherwise not be
Deduction
through December to figure your
required to pay.
You may be able to deduct premiums
deduction.
paid for medical and dental insurance for
If you are filing a joint return and both
you, your spouse, and anyone you could
How to figure the deduction. If you
you and your spouse choose to use an
claim as a dependent if you were filing
optional method to figure net earnings
qualify to take the deduction, use the
Form 1040. Effective March 30, 2010, the
worksheet on page SS-9 to figure the
from self-employment, you must each
insurance can also cover your child who
amount you can deduct on line 1b.
complete and attach a separate Part VI.
was under age 27 at the end of 2010,
You can change the method after you
However, use the worksheet in chapter
even if the child was not your dependent.
file your return. That is, you can change
6 of Pub. 535, Business Expenses, to
A child includes your son, daughter,
from the regular to the optional method or
figure the deduction if:
stepchild, adopted child, or eligible foster
from the optional to the regular method.
•
You had more than one health plan and
child.
To do this, file a new Form 1040-SS. See
each plan was established under a
You may be able to deduct the
the instructions under Amended returns
different business, or
premiums if your personal services were
on page SS-10.
•
You paid premiums on a qualified
a material income-producing factor in
long-term care insurance contract for you,
Using the optional methods may
your business and you were one of the
your spouse, or your dependents.
qualify bona fide residents of
TIP
following in 2010.
Puerto Rico to claim the additional
•
You were self-employed (sole
Conservation Reserve Program
child tax credit or give them a larger
proprietor or partner) and had a net profit
Payments
credit.
for the year.
If you were receiving social security
•
You used one of the optional methods
Farm Optional Method
retirement or social security disability
in Part VI to figure your net earnings from
benefits at the time you received your
You may use this method to figure your
self-employment.
Conservation Reserve Program (CRP)
net earnings from farm self-employment if
•
You received wages from an S
payment(s), include the amount of your
your gross farm income was $6,720 or
corporation in which you were a
taxable CRP payment(s) in the total on
less or your net farm profits were less
more-than-2% shareholder.
line 1b. The amount of these payments is
than $4,851. Net farm profits are the total
included in Part III, line 6, and in
of the amounts from Part III, line 36, and
The insurance plan must be established
information received from farm
your distributive share from farm
under your business, as discussed below.
partnerships showing your distributive
partnerships — minus the amount you
•
For self-employed individuals filing
share.
would have entered in Part V, line 1b, had
Form 1040-SS, a policy can be either in
you not used the optional method.
the name of the business or in the name
Lines 4a Through 4c
There is no limit on how many years
of the individual.
•
you can use this method.
If both lines 4a and 4c are less than $400
For partners and more-than-2%
and you have deducted CRP payments
shareholders, a policy can be either in
Under this method, report in Part VI,
on line 1b, combine lines 1a and 2.
the name of the business or in the name
line 2, the smaller of: two-thirds of your
•
If the total of lines 1a and 2 is $434 or
of the individual. You can either pay the
gross farm income (not less than zero), or
more, complete Part V through line 4c.
premiums yourself or the business can
$4,480. This method can increase or
Enter -0- in Part I, line 3. If you also have
pay them and report the premium
decrease your net self-employment farm
church employee income (see page
amounts on your partner’s statement of
earnings. You can use this method even if
SS-1), also complete lines 5a and 5b.
income or Form W-2 (for S corporation
your farming business had a loss.
Complete the rest of Part V, as
shareholders) to be included in your gross
For a farm partnership, figure your
appropriate.
income. If the policy is in your name and
share of gross income based on the
•
If the total of lines 1a and 2 is less than
you pay the premiums yourself, the
partnership agreement. With guaranteed
$434, do not complete Part V unless you
partnership must reimburse you and
payments, your share of the partnership’s
choose to use an optional method to
report the premium amounts on your
gross income is your guaranteed
figure your SE tax.
income statement to be included in your
payments plus your share of the gross
gross income. Otherwise, the insurance
income after it is reduced by all
Line 8b
plan will not be considered to be
guaranteed payments made by the
established under your business.
If you received tips of $20 or more in any
partnership. If you were a limited partner,
Other coverage. You cannot take the
month and did not report the full amount
include only guaranteed payments for
deduction for any month you were eligible
to your employer, you must file Form
services you actually rendered to or on
to participate in any employer (including
4137 with Form 1040-SS (see instructions
behalf of the partnership.
your spouse’s) subsidized health plan at
for Part I, line 5, on page SS-4).
Nonfarm Optional Method
any time during that month, even if you
Disregard the references to Form 1040
did not actually participate. In addition,
shown on Form 4137. Enter on line 8b the
You may be able to use this method to
effective March 30, 2010, if you were
amount from Form 4137, line 10.
figure your net earnings from nonfarm
SS-8
Instructions for Form 1040-SS (2010)
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