How to Calculate Gross Receipts for Self-Employment Income

You need the right forms for self-employment tax calculations.

You need the right forms for self-employment tax calculations.

You need two Internal Revenue Service forms to calculate gross receipts for federal self-employment taxes. You figure the amount of tax due and report it on a Schedule SE, Self-Employment Tax, but you total your gross receipts on a Schedule C, Profit or Loss for Business. The tax actually is based on net profit, your gross receipts minus any business expenses. You must report any income over $400 from personal business activity.

Card or Electronic Payments

Record any money you received from merchant cards or payments from third parties for any services you performed or other business activity and enter the total on Line 1a of Schedule C. This covers payments by credit card or electronic payment services.

1099-MISC

Total the amounts reported to you and the IRS on form 1099-MISC and enter that figure on Line 1b. Anyone who paid you more than $600 in a year for services, products or other endeavors is required to file a 1099-MISC. Explain any difference between the 1099-MISC total and what you itemize. Include any payments of less than $600 which you received but were not reported on a 1099-MISC. This income also is taxable.

'Statutory Employee'

If you received a W-2 payroll form as a "statutory employee" list those amounts on Line 1c. This area covers sales agents on commissions, traveling salespersons and certain homeworkers. Put down only the amount in box 1 of the W-2; you do not have to pay tax on Social Security or Medicare taxes that were withheld.

Add the Totals

Add the amounts on Lines 1a,b,c and enter the total on Line 1d. That totals your gross receipts for self-employment tax. You will have to subtract your business expenses to produce a net profit, which you enter on Schedule SE and is the amount you will be taxed on.

About the Author

Bob Haring has been a news writer and editor for more than 50 years, mostly with the Associated Press and then as executive editor of the Tulsa, Okla. "World." Since retiring he has written freelance stories and a weekly computer security column. Haring holds a Bachelor of Journalism from the University of Missouri.

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