Section 1402 of the Internal Revenue Code

Section 1402 of the Internal Revenue Code defines self-employment income for tax purposes. It specifies what income counts as earnings for self-employed individuals, including profits from a business or profession. This section also outlines allowable deductions related to self-employment, such as business expenses. Ultimately, the net income calculated under this section helps determine how much self-employment tax an individual must pay, which contributes to Social Security and Medicare. In essence, it clarifies how self-employed individuals report their earnings and associated deductions for tax liability.