NESE must be at least $400 for a taxable year before any of the NESE will be taxable and creditable as self-employment income (SEI). If NESE is less than $400 for the taxable year (either actual NESE or as computed under the optional method), there is:

• •

  no SEI for that year and,

• •

  no SE tax payable and,

• •

  no earnings credited to the earnings record.

1. a. 

   Varies from year to year.

2. b. 

   If an individual has both covered wages and SEI in a tax year:

   • •

     the wages are credited/posted to the earnings record first,

   • •

     then SEI is credited/posted up to the established maximum for that year.

     Example:	FICA MAXIMUM	76,200
     	WAGES	70,000
     	NESE	10,000
     	Postable SEI	6,200

   See the chart in RS 01801.100 to determine the FICA maximum for a particular year.

   NOTE: Prior to tax year 1994 the FICA and Medicare maximums were always equal. However, effective with tax year 1994 and all subsequent years the Medicare maximum exceeds the FICA maximum. Therefore, any excess Medicare will also be posted/credited to the master earnings record and reflected on the DEQY as excess Medicare.

1. a. 

   Individual members of a partnership are considered self-employed.

2. b. 

   Each member/partner is credited with their distributive share of ordinary partnership income, whether or not actually distributed.

3. c. 

   It is not necessary that the individual member/partner actually perform any services; silent partners may have covered earnings, but limited partners may not.