Schedule SE, Self-employment Tax is used to compute business earnings that are subject to self-employment tax.  The SE tax rate is 15.3% (12.4% represents social security tax and 2.9% represents Medicare Tax).  Sole proprietors with more than one business should combine profit/loss for each business to determine total earnings subject to this tax.  So, a loss from one business and a gain from the other business will reduce total earnings subject to self-employment tax; and a profit from both businesses will increase total earnings subject to the tax.

Notary Publics do not have to pay this tax.  Also, self-employed U.S. citizens or residents who live abroad do not have to pay this tax if their country has an agreement with the U.S. that the tax will not be paid twice (once by each county).

Net earnings subject to self-employment tax can be computed using the regular method; nonfarm optional method; or the farm optional method.  Either optional method should be chosen if (i) you want to receive credit for social security benefit coverage and (ii) you want to claim certain credits on your 1040 such as child and dependent care, earned income tax credit, and the additional child tax credit.

Schedule SE, Self-employment Tax should be attached to Form 1040 along with Schedule C or C-EZ.

For more information on computing self-employment tax see Pub. 334, Tax Guide for Small Businesses.