Indie authors should complete Schedule SE

An important federal tax form that indie authors will have to file is Schedule SE.

The schedule calculates the self-employment taxes owed for Social Security and Medicare. Since you don’t earn a paycheck, the government collects your contribution to those programs via self-employment tax. The form is attached to the IRS Form 1040.

Determining your self-employment tax first requires that you know your net income from your business. That is determined by completing Schedule C.

If your income only comes through self-employed income, you likely only need to complete the short form in Schedule SE’s Section A. If you earn income in addition to being self-employed (such as if you have a day job), you’ll need to complete Section B.

The form is fairly straightforward and easy to complete – so long as you’ve been keeping good business records. The numbers you need to complete the form will be found in your general ledger account.

Once you’ve calculated your self-employment tax, that number is placed in two spots on your 1040.

If you’ve earned less than $400 from self-employed income, you don’t owe any self-employment tax. In addition, while the total net profit from all of your businesses is reported, only the first $106,800 is taxable for Social Security purposes.