Student Income Tax Guide: Self-Employment Income
Earnings you received from self-employment are subject to income tax. These earnings include income from baby-sitting and lawn mowing. These earnings are not self-employment income if you provided these services as an employee.
You are taxed on your net earnings (income you received minus any business expenses you are allowed to deduct). For information on what expenses can be deducted, see Publication 535 , Business Expenses. As a self-employed person, you are responsible for keeping records to show how much income you received and how many expenses you had. Your income and expenses are reported on Schedule C or C-EZ (Form 1040). An example of a filled-in Schedule C-EZ appears at the end of this publication.
Self-employment tax
If you had net earnings of $400 or more from self-employment, you also will have to pay self-employment tax. This tax pays for your benefits under the social security system. Social security and Medicare benefits are available to individuals who are self-employed the same as they are to wage earners who have social security tax and Medicare tax withheld from their wages. The self-employment tax is figured on Schedule SE (Form 1040). For more information on self-employment tax, see Publication 533 , Self-Employment Tax.
Newspaper Carriers and Distributors
Special rules apply to services you perform as a newspaper carrier or distributor. You are a direct seller and treated as self-employed for federal tax purposes if you meet the following conditions.- You are in the business of delivering/distributing newspapers or shopping news, including directly related services such as soliciting customers and collecting receipts.
- Substantially all your pay for these services directly relates to sales or other output rather than to the number of hours worked.
- You perform the delivery services under a written contract between you and the service recipient that states that you will not be treated as an employee for federal tax purposes.
Carriers and Vendors Under Age 18
Carriers or distributors (not including those who deliver or distribute to any point for subsequent delivery or distribution) and vendors (working under a buy-sell arrangement) under age 18 are not subject to self-employment tax.
If you were self-employed, you can deduct half of your self-employment tax and part of your health insurance premiums. See the Form 1040 instructions for lines 27 and 28 for more information.