IRS Form 1040-SS, officially titled “U.S. Self-Employment Tax Return (Including the Additional Child Tax Credit for Bona Fide Residents of Puerto Rico),” is a crucial document used by self-employed individuals residing in U.S. Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands (CNMI), or Puerto Rico to report their self-employment income and pay self-employment tax. This form serves as an alternative to the standard Form 1040 for eligible residents of these territories, allowing them to fulfill their U.S. tax obligations related to self-employment income. Form 1040-SS is particularly important as it not only facilitates the reporting and payment of self-employment tax but also provides an opportunity for bona fide residents of Puerto Rico to claim the Additional Child Tax Credit, a benefit that can significantly impact their overall tax situation. By providing a structured means of reporting self-employment income and calculating the associated tax liability, Form 1040-SS plays a vital role in ensuring compliance with U.S. tax laws for individuals in these specific territories while accommodating their unique tax circumstances.
What is IRS Form 1040-SS?
IRS Form 1040-SS is a specialized tax return used by self-employed individuals who are residents of U.S. Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands (CNMI), or Puerto Rico. It serves several key purposes:
- Reporting self-employment income
- Calculating and paying self-employment tax
- Claiming the Additional Child Tax Credit (for bona fide residents of Puerto Rico)
Key features of Form 1040-SS:
- Designed specifically for residents of certain U.S. territories
- Focuses on self-employment tax and related credits
- Includes provisions for the Additional Child Tax Credit for Puerto Rico residents
Who Must File Form 1040-SS?
Form 1040-SS must be filed by self-employed individuals who meet the following criteria:
- Are residents of U.S. Virgin Islands, Guam, American Samoa, CNMI, or Puerto Rico
- Have net earnings from self-employment of $400 or more
- Do not have to file Form 1040 or Form 1040-SR with the United States
Additionally, even if net earnings are less than $400, individuals may need to file Form 1040-SS if:
- They are eligible for the Additional Child Tax Credit (Puerto Rico residents only)
- They owe Household Employment Taxes
1040-SS Instructions
Step 1: Gather Necessary Information
Before filling out the form, collect all relevant information, including:
- Social Security number(s)
- Self-employment income records
- Estimated tax payment records
- Information about qualifying children (for Puerto Rico residents claiming Additional Child Tax Credit)
Step 2: Complete the Header
Fill in personal information at the top of the form, including:
- Name(s)
- Social Security number(s)
- Home address
- Foreign address (if applicable)
Step 3: Answer the Digital Asset Question
Indicate whether you received, sold, exchanged, or disposed of any digital assets during the tax year
Step 4: Complete Part I – Total Tax and Credits
- Check the appropriate filing status box
- List qualifying children (if claiming Additional Child Tax Credit)
- Calculate and enter self-employment tax from Schedule SE
- Enter any household employment taxes (if applicable)
- Add Additional Medicare Tax (if applicable)
- Calculate total tax
- Enter any tax payments or credits
- Calculate the amount owed or refund due
Step 5: Complete Part II (if applicable)
If you’re a bona fide resident of Puerto Rico claiming the Additional Child Tax Credit:
- Determine eligibility based on qualifying children
- Calculate the credit amount based on income and number of children
- Enter the final credit amount on Part I, line 91
Step 6: Sign and Date the Form
Sign and date the form. If filing jointly, both spouses must sign
Step 7: Attach Required Schedules and Forms
Include any necessary schedules, such as Schedule SE for self-employment tax calculations.
Step 8: Submit the Form
File Form 1040-SS according to the instructions:
- Electronically (if eligible)
- By mail to the appropriate IRS address based on your location