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Different types of income can be SE income. The source of your income and your involvement in the activity from which your income is received will determine whether it is SE income.

Gains and losses. A gain or loss from the disposition of property that is neither stock in trade nor held primarily for sale to customers is not included when figuring SE income. It does not matter whether the disposition is a sale, exchange, or an involuntary conversion. For example, gains or losses from the disposition of the following types of property are not included in self employment income:

1. Investment property.
   
2. Depreciable property or other fixed assets used in your trade or business.
   
3. Livestock held for draft, dairy, breeding, or sporting purposes and not held primarily for sale, regardless of how long the livestock were held or whether they were raised or purchased.
   
4. Standing crops sold with land held more than one year.
   
5. Timber, coal, or iron ore held for more than one year, if an economic interest was retained, such as a right to receive coal royalties.

A gain or loss from the cutting of timber is not included if the cutting is treated as a sale or exchange.

Dividends. Dividends on securities are not SE income unless you are a dealer in securities.

Independent contractor. People such as lawyers, contractors, subcontractors, public stenographers, auctioneers, etc., who follow an independent trade, business, or profession in which they offer their services to the general public are generally not employees. However, whether such people are employees or independent contractors depends on the facts in each case. The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not the means and methods of accomplishing the result. Income earned by an independent contractor is SE income.

You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). If an employer-employee relationship exists (no matter what the relationship is called), you are not an independent contractor.

For more information in determining whether you are an independent contractor or an employee, get Publication 15-A.

Interest. Interest is not SE income unless you receive it in your trade or business. This includes interest on accounts receivable or from bonds, notes, etc., if you are a dealer in stocks or securities.

Newspaper carriers. The wages newspaper carriers receive for delivering newspapers or shopping news to customers is not SE income. If the carriers are 18 or over, the wages are subject to withholding for social security and Medicare taxes (FICA taxes).

However, if a carrier is 18 or over and works under an arrangement in which the carrier's pay is the difference between a fixed sales price and the cost of the newspapers to the carrier, the income is SE income. Newspaper vendors. The income newspaper vendors receive for selling newspapers or magazines directly to customers for a profit is not SE income if the vendor is under age 18. However, if the vendor is 18 or over, the income is SE income.

Notary public. Fees received for services performed as a notary public are not subject to SE tax.

Part-time business. Income from an activity you carry on part-time is SE income. For example, in your spare time you fix televisions and radios. You have your own shop, equipment, and tools. You get your customers from advertising and word-of-mouth. The income you earn from your repair shop is SE income.

Real estate agents and direct sellers. Income received by a licensed real estate agent or a direct seller may be SE income. A licensed agent or direct seller generally is treated as self-employed if:

1. Substantially all remuneration paid for services as a real estate agent or direct seller is directly related to sales or other output rather than hours worked, and
   
2. The services are performed under a written contract that provides that the agent or seller will not be treated as an employee for federal tax purposes.

For more information, see Publication 15-A and Publication 911.

Real estate rent. Rent from real estate and personal property leased with real estate is not SE income. However, if you receive rent as a real estate dealer, include the rental income and related deductions in figuring SE income.

Hotels, apartments, etc. Rents received for the use or occupancy of hotels, boarding houses, or apartment houses are not rentals from real estate if services are provided for the occupants. These rental payments are included in figuring net income from self-employment. Services generally are provided for the occupants if they are primarily for their convenience and not services normally provided with the rental of rooms for occupancy only. Maid service, for example, is a service provided for the convenience of the occupants. However, heat and light, the cleaning of stairways and lobbies, and the collection of trash are not services primarily for the occupants' convenience.

Trailer park owners. Rent received by trailer park owners who provide trailer lots, facilities, and services is rent from real estate. It is not included in SE income unless the services provided by the owners are substantial and for the convenience of tenants. Providing services, such as city sewerage, electrical connections, and roadways, are services required to maintain space for tenant occupancy and not services for the convenience of tenants. Although the operation and maintenance of a trailer park laundry facility is a service provided for the convenience of tenants, it is not, by itself, substantial.

If, however, the owners provide services for tenants that are beyond those required for occupancy and are substantial in nature, the owner's earnings are included in SE income. Services for tenants that are beyond those required for occupancy include supervising and maintaining a recreational hall provided by the park; distributing a monthly newsletter to tenants; operating a laundry facility; and helping tenants buy or sell their trailers.

Research grants. If you receive payments under a research grant from a governmental foundation but you are not under the control of either the grantor foundation or the grantee institution, you are an independent contractor. The payments you receive are SE income.

Retired insurance agents. The income paid by insurance companies to retired insurance agents that is based on a percentage of commissions received prior to retirement is SE income. Also, the income for renewal and deferred commissions for sales made prior to retirement is SE income.

However, renewal commissions paid to the survivor of an insurance agent is not SE income.

Sole proprietor. If you own and operate your own business as a sole proprietor, the income from your business is SE income. If your spouse works with you in your business, see Partners, later.

U.S. possession self-employment income. SE income from activities in a U.S. possession is subject to SE tax, even if your possession income is exempt from U.S. income tax.

Form to file. If you are required to file Form 1040, report all of your SE income on Schedule SE.

Wages, salaries, and tips. Wages received for services performed as an employee and covered by social security are not SE income. Tips received for work done as an employee are also excluded from SE income.

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