This handout is useful during an IRS examination for the purposes of establishing the amount of self-employment tax owed.

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Self-Employment Tax

"In addition to other taxes, there shall be imposed for each taxable year, on the self-employment income of every individual, a tax..." [26 USC § 1401(a)]

"The term ‘self-employment income’ means the net earnings from self-employment derived by an individual..." [26 USC § 1402(b)]

"The term ‘net earnings from self-employment’ means the gross income derived by an individual from any trade or business carried on by such individual, less the deductions allowed by this subtitle..." [26 USC § 1402(a)]

 

"Except as otherwise provided in this subtitle, gross income means all income from whatever source derived..." [26 USC § 61] (26 USC § 1401 is in Subtitle A)