K-1 from Partnership 1065

[Bonnie]

I have a taxpayer with a K-1 from a Partnership with an amount in box 14C for self-employment earnings. My software does not carry this amount anywhere but gives me a message to enter the appropriate amount where needed. I have never had a return with this before and want to make sure I do this correctly. Any help with figuring the appropriate amount and where to carry it would be appreciated.

Thanks in advance

[Larmil]

I have a taxpayer with a K-1 from a Partnership with an amount in box 14C for self-employment earnings. My software does not carry this amount anywhere but gives me a message to enter the appropriate amount where needed. I have never had a return with this before and want to make sure I do this correctly. Any help with figuring the appropriate amount and where to carry it would be appreciated.

Thanks in advance

See 'Partner’s Instructions for Schedule K-1 (Form 1065)' at irs.gov. It explains what enter on Sched SE.

[Burke]

I have a taxpayer with a K-1 from a Partnership with an amount in box 14C for self-employment earnings. My software does not carry this amount anywhere but gives me a message to enter the appropriate amount where needed. I have never had a return with this before and want to make sure I do this correctly. Any help with figuring the appropriate amount and where to carry it would be appreciated.Thanks in advance

It should carry it to Sche SE -- it may be netted with other SE income.

[David1980]

The code "C" is used for the optional method of SE tax. See Part II of Schedule SE. Also note the caution for the non-farm method (You may use this method no more than five times).

Basically by choosing the optional method you pay SE on the gross instead of the net profits. So it's an election to pay more taxes.

Why would anyone elect to pay more taxes? To generate more social security credit. It may be beneficial to pay higher tax in the current year in order to cash in on higher social security benefits. It could also result in a higher EIC because EIC is based in part on SE income, and you're reporting higher SE income.

That said, I've never done one with the optional method.

[Larmil]

The code "C" is used for the optional method of SE tax. See Part II of Schedule SE. Also note the caution for the non-farm method (You may use this method no more than five times).

Basically by choosing the optional method you pay SE on the gross instead of the net profits. So it's an election to pay more taxes.

Why would anyone elect to pay more taxes? To generate more social security credit. It may be beneficial to pay higher tax in the current year in order to cash in on higher social security benefits. It could also result in a higher EIC because EIC is based in part on SE income, and you're reporting higher SE income.

That said, I've never done one with the optional method.

I have used the optional method before. Sometimes for farmers and sometimes for retired gov't employees to get their 'quarters'.