Save time with our cheat sheets, fact sheets, checklists & books!

February 16, 2009

Net business income (NBI)

Print

Definition

The amount of income from self-employment  income after ordinary and necessary business expenses.
The net business income is the amount  on which the self-employed individual must pay self-employment taxes.

The net business income is determined from the individual’s Schedule C or Schedule F

Referring Cite

IRC § 1402(a), IRS Publication 560

Additional Helpful Information

  • Contributions cannot be based on a net-loss
  • For SEP and qualified plans, net earnings from self-employment is gross income from trade or business (providing the self-employed individual’s  personal services are a material income-producing factor) minus allowable business deductions. Allowable deductions include contributions to SEP and qualified plans for common-law employees and the deduction allowed for one-half of the individual’s  self-employment tax.
  • For SIMPLE plans, net earnings from self-employment is the amount on line 4 of Short Schedule SE (Form 1040), Self-Employment Tax, before subtracting any contributions made to the SIMPLE plan for the self-employed individual.
More

Keep Learning

Applicable RMD Age

Applicable RMD Age The first year for which an IRA owner or plan participant must begin to take RMDs from their tax-deferred retirement account. RMDs

SIMPLE 401(k) Plan

Definition A SIMPLE 401(k) plan is a 401(k) plan established by a small business for it’s employees. Earnings accrue on a tax-deferred basis and distributions

Required Minimum Distribution (RMD)

Definition The minimum amount that must be withdrawn from retirement accounts, including qualified plans, 403(b) accounts, 457(b) accounts or IRAs, each year.  For retirement account

Required beginning date (RBD)

Definition The date by which a retirement account owner must begin distributing required minimum distribution (RMD) amounts from a Traditional,  SEP or SIMPLE IRA, a

Be among the first to know when

IRA Rules
Change