Accounting Aid Society

1
Accounting Aid Society

• Self-Employment
• Tax Site Issues

2
Self-Employment

• Some clients do work for which they receive money
  which is not wages.
• If they do, we need to prepare a Schedule C or
  Schedule C-EZ.
• They may or may not receive a Form 1099-MISC.
• They have to pay both the employees and the
  employers Social Security and Medicare taxes.
  This is computed on Schedule SE, Self-Employment
  Tax.
• TaxWise will automatically bring in a Schedule SE
  and calculate this tax.

3
Self-Employment Continued

• We can do simple returns with self-employment
  income. For example, if the client earned
  5,214 providing day care and had expenses of
  553 for care-related expenses.
• The client should have records.
• Be sure to work with a supervisor on these.
• Do not do these returns if the business is
  complicated, the client has hired other people to
  help, there is inventory, or there are numerous
  income and expense items.

4
Self-Employment -Continued

• Automobile expenses Most taxpayers elect to use
  the standard mileage rate of 44.5 cents per
  business mile (commuting and personal miles do
  not count) plus parking and tolls while on
  business
• Daycare providers are allowed a standard rate for
  meals and snacks, contained in IRS Publication
  587, Business Use of Your Home.

5
Self-Employment -Continued

• The self-employment tax is calculated as follows
• Net profit (line 3, Schedule C-EZ)
• Multiplied by .9235
• This total multiplied by 15.3
• A deduction For AGI is allowed in the amount of
  one-half of the self-employment tax computed
  above.