SEI500 — NON-COVERAGE PRIOR TO 1951
Before 1951, self-employed persons were not covered by Social Security.
SEI501 — COVERAGE
Since 1951, most self-employed persons have been covered by Social Security if they
had net earnings of at least $400 per year from their work. (Option a or b) .
Options:
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a.
This coverage applies to all citizens and residents of the United States.
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b.
In some cases, it may be possible to use a special computation method, based on gross
earnings, to establish net earnings of $400.
SEI502 — ALIEN RESIDENTS IN THE U.S.
If an alien is a resident of the U.S. and has earnings from self-employment, the earnings
are counted for Social Security purposes regardless of where the money is earned.
SEI503 — ALIEN REFERRAL
You may obtain further information about reporting self-employment income, plus any
forms you may need, by contacting the Internal Revenue Service. You may contact the
office where you filed your Federal income tax returns, or write to the Internal Revenue
Service, 11601 Roosevelt Boulevard, Philadelphia, Pennsylvania 19255.
SEI504 — EXPLANATION OF “NET EARNINGS”
The term “net earnings from self-employment” means a person's gross income for income
tax purposes from a trade, business, or profession, minus allowable deductions. (Option, if applicable) .
Option:
This amount can also include a person's share of the ordinary net income or loss from
any business in which he or she is involved as a partner. We do not include payments
to limited partners, unless they are paid for services to or for the partnership.
SEI505 — INCOME NOT INCLUDED IN NET EARNINGS
However, net earnings from self-employment for Social Security purposes do not include
(Option a through g) .
Options:
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a.
farm rental income if the landlord does not materially participate in production of
the crop.
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b.
dividends on stock or interest on bonds or loans.
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c.
retirement payments made by a partnership to a retired partner. (There are a few exceptions to this rule.)
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d.
capital gains and losses.
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e.
gains and losses from the disposition of property which is not stock in trade.
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f.
payments made by a partnership to a limited partner, unless they are paid for services
to or for the partnership.
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SEI506 — INCOME NOT REPORTED
Such income should not be reported for Social Security purposes.
SEI507 — COVERAGE FOR CERTAIN OCCUPATIONS
Self-employed (Option a through l) are covered by Social Security. Coverage for this group began with taxable years
ending after (Option a through l) .
Options:
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SEI508 — COVERAGE FOR MEDICAL DOCTORS
Self-employed medical doctors are covered by Social Security. Coverage for this group
began with taxable years ending on or after December 31, 1965.
SEI509 — REPORTING INCOME
Persons who have yearly net earnings from self-employment of $400 or more are required
to report these earnings for Social Security purposes as part of their Federal income
tax returns. This is true even though they do not owe Federal income tax.
SEI510 — HOW TO FIGURE INCOME
An explanation of how to figure self-employment income is contained in the enclosed
pamphlet.
SEI511 — UNABLE TO CREDIT INCOME
We cannot add self-employment income for (year) to your earnings record. This is because you did not file your tax return on time
and did not question your earnings record until (year) .
SEI512 — COMPLETION OF SCHEDULE SE
Self-employed people must usually pay Social Security taxes on net earnings of $400
or more, up to the yearly maximum amount. They do this with their Federal income tax
returns by completing Schedule SE (Computation of Social Security Self-Employment Tax) after figuring their net earnings on Schedule C or F. (Option a or b) .
Options:
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a.
If both husband and wife are self-employed, they should each complete these schedules,
regardless of whether they are filing separate or joint tax returns.
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b.
If a person had net earnings of $400 or more for a year, and did not file Schedule
SE as part of a tax return, he or she should contact the Internal Revenue Service.
They will explain how to correct the omission.
SEI513 — COVERAGE FOR SPOUSE
Before 1988, wives working for their husbands and husbands working for their wives
were not covered by Social Security. If this work is part of the spouse's trade or
business, it has been covered since 1988.
SEI514 — SEI REPORTED UNDER MAIDEN NAME
You used your maiden name when you filed your tax return jointly with your husband.
However, the Internal Revenue Service (IRS) assumed that your self-employment income was to be reported under your husband's
surname rather than the name you used on the Schedule SE.
We have discussed this problem with the IRS and they are taking action to correct
the name under which they send us information about your self-employment income.
SEI515 — SEI POSTED UNDER INCORRECT SSN — MORE THAN ONE YEAR
Our records show that reports of self-employment income were filed under your Social
Security number. We have found that you are not the person who earned this income.
Therefore, we are removing the following amounts from your earnings record:
Year Amount
SEI516 — SEI POSTED UNDER INCORRECT SSN — ONE YEAR
Our records show that a report of self-employment income for (year(s)) was filed under your Social Security number. We found that you are not the person
who earned this income. Therefore, we are removing the $(amounts) from your earnings record for (year) .
SEI517 — BUSINESS PARTNERS
The facts in your case show that the business arrangement between you and (name) is considered a partnership by Social Security. Therefore, we have changed the amount
of self-employment income on your earnings record (Option a or b) .
(Option c, if applicable)
Options:
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a.
for (year) from $(amount) to $(amount) .
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c.
We have also shown $(amount) as your share of the partnership income for
(year) .
SEI518 — PARTNERSHIP INCOME POSTED INCORRECTLY
We have found that you reported $(amount) in self-employment income for (year) , and that this was money you received as a limited partner in the business of (name of partnership) . You performed no services for this partnership. Payments to limited partners are
covered by Social Security only if the payments are made for services to or on behalf
of the partnership. Therefore, we have (Option a or b) .
Options:
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a.
removed from your earnings record the $(amount) which you reported as self-employment income for (year) .
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b.
reduced the amount of your self-employment income for (year) from $(amount) to $(amount) .
SEI519 — INCOME INVESTIGATION COMPLETED
We have finished our review of your self-employment income for (year) .
SEI520 — ALLOWABLE EXPENSE NOT DEDUCTED
We found that you did not deduct $(amount) for (type of expense) in (year) as an allowable business expense. You are required to deduct all allowable expenses
when you figure your net earnings from self-employment.
SEI521 — INTEREST AND DIVIDENDS INCLUDED IN NET EARNINGS
We found that you included (Option a, b or c) of $(amount) when you figured your net earnings from self-employment, and that you are not a securities
dealer. This type of income can be included in net earnings only by securities dealers.
Options:
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SEI522 — CAPITAL GAINS REPORTED
We found that you included $(amount) from the sale of (specify property) when you figured your net earnings from self-employment. The proceeds of this sale
are capital gains because (specify property) (Option a or b) not stock in trade, and not for sale to customers in the normal course of business.
Capital gains cannot be included in figuring net earnings.
Options:
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SEI523 — RENTAL INCOME REPORTED
We found that you included rental income from real estate of $(amount) when you figured your net earnings from self-employment. Rentals may not be included
in figuring net earnings unless:
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the rentals are received by a real estate dealer as part of a regular business, or
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services are provided primarily for the convenience of tenants rather than for the
owner.
Since your rental income from real estate did not meet either of these exceptions,
you cannot include it in figuring your net earnings.
SEI524 — OTHER INCOME REPORTED
We found that your income was from (specify source of income) . You cannot include this kind of income in your net earnings from self-employment.
SEI525 — FARM RENTAL INCOME REPORTED
We found that you included $(amount) from farm rentals when you figured your net earnings from self-employment. This income
can be included only if:
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there is a farm rental agreement, and
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the agreement requires you to materially participate in production of crops or management
of production on the rented land.
SEI526 — SOIL BANK PAYMENTS REPORTED
We found that you included $(amount) from soil bank payments when you figured your net earnings from self-employment.
This income can be included only if the payments are made to a farm operator or to
a farm landlord who participates materially in the farm operations. Since neither
of these things is true, you cannot include the soil bank payments when you figure
your net earnings. (Option, if applicable) .
Option:
We have enclosed a pamphlet which explains the requirements for farm landlords to
participate in operations.
SEI527 — NET EARNINGS NOT REPORTABLE
We found that you (Option a, b or c) from operating a (type of business) . Net earnings have to be at least $400 per year to be considered self-employment
income for Social Security purposes.
Options:
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a.
had net earnings of $(amount)
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b.
had net earnings of less than $400
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SEI528 — NON-RESIDENT ALIEN CLAIMING INCOME
We found that you are neither a citizen nor a resident of the United States. Therefore,
we cannot count your net earnings from self-employment for Social Security purposes.
SEI529 — EARNINGS REPORTED AS INCOME
We found that you reported as self-employment income $(amount) which you earned as an employee. Income earned as an employee usually cannot be counted
as self-employment income from a trade or business.
SEI530 — MQGE REPORTED AS INCOME
We found that you deducted Medicare Qualified Government Earnings from your taxable
self-employment income. We changed your record to show the following:
Year Amount of Income
SEI531 — PUBLIC OFFICIAL — OTHER THAN A NOTARY PUBLIC
The $(amount) you reported for services performed as a (name of office held) in (year) does not count as self-employment income for Social Security purposes. Work in a
public office is not considered to be part of a trade or business. The only exception
to this rule is if the work
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was for a State or local government, and
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was compensated on a fee basis only, and
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was not considered employment for Social Security purposes under Section 218 Agreement
between SSA and the State.
The work you performed did not meet this exception.
SEI532 — MQGE REPORTED AS INCOME
We treat the earnings of employees of State or local governments as self-employment
income if their work
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was compensated on a fee basis only, and
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was not considered employment for Social Security purposes under Section 218 Agreement
between SSA and the State.
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This means that net earnings of $400 or more from such work should be reported to
the Internal Revenue Service as self-employment income when a tax return is filed.
(Option, if applicable) .
SEI533 — NOTARY PUBLIC REPORTED EARNINGS AS INCOME
The $(amount) you reported for services performed as a notary in (year) does not count as self-employment income. This is because service as a notary public
is not considered a trade, business or profession for Social Security purposes.
SEI535 — EARNINGS REPORTED AS INCOME BEING REMOVED — ONE YEAR INVOLVED
Therefore, the $(amount) you reported as self-employment income for (year) is being removed from your earnings record.
SEI536 — EARNINGS REPORTED AS INCOME BEING PARTIALLY
REMOVED —ONE YEAR INVOLVED
Therefore, we are reducing the amount of self-employment income on your earnings record
for (year) from $(amount) to $(amount) .
SEI537 — EARNINGS REPORTED AS INCOME BEING CHANGED
Therefore, we are changing the amount of self-employment income on your earnings record
as follows:
Year From To
SEI538 — EARNINGS REPORTED AS INCOME BEING REMOVED — MORE THAN ONE YEAR INVOLVED
Therefore, we are removing from your earnings record the amounts you reported as self-employment
income for the years shown below:
Year Amount
SEI539 — IRS NOTIFIED OF ADJUSTMENT
We will send a copy of our decision about your self-employment income to the Internal
Revenue Service. They will make any changes that are needed to the tax record.
SEI540 — PROPOSED LANGUAGE EXPLAINING THE DIFFERENCE IN MONEY AMOUNTS ON SCHEDULE SE (FORM
1040) AND IN SOCIAL SECURITY RECORDS.
Why Your Records May Differ from Ours
Starting with taxable years beginning after 1989, the law changed the way you figure
net earnings from self-employment for Social Security purposes. Now, self-employed
people must deduct 7.65 percent from their net profit from self-employment when they
figure their net earnings for Social Security.
To make this calculation, multiply the amount on the net profit line of Schedule SE
(Form 1040) by .9235 (100 percent less 7.65 percent). The result is net earnings from
self-employment for Social Security purposes. We use this amount to:
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figure Social Security benefits;
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count Social Security work credits; and
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decide if a working beneficiary can get benefits.
If you want more information about how this deduction is applied, contact the Internal
Revenue Service and ask for Publication 533 (Self-Employment Tax).
In (1) , you reported your net profit from business as (2) on your tax return. Your net profit is reduced by 7.65 percent to get your earnings
from self-employment of (3) . This is the amount shown on your Social Security earnings record for tax year (4) .
Options:
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c.
Money amount on earnings record
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