Tax Trails - Self-Employment Income
If you are a member of a crew on a fishing boat, you are considered self-employed for purposes of social security and Medicare taxes if you meet ALL of the following conditions:
- You did not get, and are not entitled to get, any money for your work
- other than as provided in condition 2, and
- other than cash pay which does not exceed $100 per trip, which is contingent on a minimum catch, and which is solely for additional duties for which additional cash pay is traditional in the industry.
- You get a share of the catch or a share of the proceeds from the sale of the catch.
- Your share depends on the amount of the catch.
- The operating crew of the boat (or each boat from which you get a share for fishing operations involving more than one boat) usually numbers less than 10.
If you are an officer or a member of a crew and meet these qualifications, you are treated as self-employed and must report your income on Schedule C (Form 1040) (.pdf), Net Profit or Loss From Business. Your fishing services can include those ordinarily related to fishing, such as shore services that includes cleaning, icing, and packing fish. You are not treated as self-employed if you are under age 18 and are working for your father or mother.
You figure your self-employment tax on Schedule SE (Form 1040) (.pdf), Self-Employment Tax.
If you earn or receive income during the year that is not subject to withholding or you do not have enough tax withheld, you may have to pay estimated tax. If you do not pay enough tax during the year through withholding or by making estimated tax payments, you may have to pay a penalty.
For more information on commercial fishing, refer to Publication 595, Capital Construction Fund for Commercial Fishermen. For more information on estimated tax, refer to Chapter 2 of Publication 505, Tax Withholding and Estimated Tax.