"2027" can mean two things: the 2027 tax year (filed in 2028), or a return filed during 2027 (which covers tax year 2026). As at November 2026, the IRS lists the 2025 Form 1040-SS as final. The 2026 draft is marked "do not file", and no final 2027 revision is confirmed. Always use the form and instructions matching your tax year.
This guide covers the decision path: confirm territorial residency, check filing triggers, calculate net earnings, complete the form, pay, and keep records.
Key Takeaways
- Form 1040-SS needs bona fide residence in an eligible U.S. territory plus a filing trigger.
- Australian residence, U.S. clients, or U.S. payments alone do not qualify you.
- The 2027 Social Security wage base is $192,300; confirm every other figure against your tax year's forms.
- Forms 1040, 1040-NR, 1040-PR and Schedule SE serve different purposes.
What Form 1040-SS Is and Who Must File
What the form does
Form 1040-SS reports net self-employment earnings and calculates Social Security and Medicare self-employment tax for eligible territory residents. It is not a complete federal income tax return. The IRS form page notes that the Social Security Administration uses the earnings information to determine benefits, so accurate name and SSN matching protects your earnings record.
How eligibility works
For 2027, all three conditions must apply:
- You (or your spouse on a joint return) have net self-employment earnings of $400 or more, or church employee income of $108.28 or more.
- You are not required to file Form 1040.
- You are a bona fide resident of Guam, American Samoa, the U.S. Virgin Islands, the Northern Mariana Islands, or Puerto Rico.
Below the earnings trigger, you may still file to report:
- Household employment taxes
- Additional Medicare Tax
- Excess Social Security withholding
- The Puerto Rico additional child tax credit (ACTC)
Publication 570 sets three residence tests:
| Test | Core rule |
|---|---|
| Presence | For example, 183 days in the territory during the year, or 549 days over three years with at least 60 each year |
| Tax home | No tax home outside the territory in any part of the year |
| Closer connection | No closer connection to the U.S. or a foreign country than to the territory |
The IRS gives an example of failure: a consultant moves to Puerto Rico but keeps family, home, banking, driving licence and voting ties in California. That person is not a bona fide resident.
Comparing the forms
- Form 1040 / 1040-SR: full income tax return for U.S. citizens and residents.
- Form 1040-NR: nonresident aliens with U.S. tax obligations.
- Form 1040-SS: self-employment tax for eligible territory residents not required to file Form 1040.
- Form 1040-PR: replaced by Form 1040-SS from tax year 2023.
Australian residents and cross-border cases
Australia is not a listed territory. Living in Australia, serving U.S. customers, or receiving U.S. payments does not meet the residency requirement. If you have split-year residence, time in a territory, a foreign tax home, or a possible Form 1040 or 1040-NR obligation, review your situation before you pick a form.
How to Calculate and Report Self-Employment Tax
From business income to net earnings
Self-employment tax applies to net earnings, not gross receipts. Subtract allowable business expenses from receipts. Non-farm activity generally goes on Schedule C, and farming on Schedule F.
For 2025, Schedule C line 31 flows to Schedule SE line 2, and Schedule F line 34 flows to line 1a. Schedule SE then generally multiplies positive profit by 92.35% to get net earnings.
Schedule SE to Form 1040-SS
The tax result on Schedule SE line 12 goes to Form 1040-SS, Part I, line 3. Joint filers each complete their own Schedule SE. Multiple businesses, wages already subject to Social Security tax, and losses all affect the calculation, so check the Schedule SE instructions for your year.
Rates and wage bases
- Social Security: 12.4%, up to the annual wage base.
- Medicare: 2.9%, with no ceiling.
- Combined rate: 15.3% before the Social Security cap applies.
| Tax year | Social Security wage base |
|---|---|
| 2025 | $176,100 |
| 2026 | $184,500 |
| 2027 | $192,300 |
The 2027 figure comes from the SSA announcement. Do not mix years.
Additional Medicare Tax
A 0.9% Additional Medicare Tax applies above these thresholds, with Medicare wages and self-employment income combined:
| Filing status | Threshold |
|---|---|
| Married filing jointly | $250,000 |
| Married filing separately | $125,000 |
| Single, head of household, qualifying surviving spouse | $200,000 |
Attach Form 8959 and report the tax on Part I, line 5.
Deductions and the Puerto Rico credit
Form 1040-SS filers skip the Schedule SE line that calculates the deduction for half of self-employment tax. That deduction normally flows to Schedule 1 of Form 1040. Part II separately uses half the SE tax in the ACTC calculation.
Part II applies only to bona fide Puerto Rico residents. The other territories should not claim it through Form 1040-SS.
How to Complete Form 1040-SS Step by Step
Gather records first
- Name and SSN or ITIN, exactly as on your Social Security card
- Proof of territorial residency
- Income and expense records
- Wage statements, including Puerto Rico Forms 499R-2/W-2PR where relevant
- Estimated and extension payment records
- Prior-year returns and bank details
Confirm the tax year, then download the matching form, instructions and schedules.
Taxpayer information
Enter names, addresses and spouse details exactly as IRS and SSA records show them. Misspelled names and missing SSNs are among the common mistakes the IRS lists. Obtain an SSN if you are eligible; otherwise apply for an ITIN. Not having an SSN does not decide whether Form 1040-SS applies; territorial residency rules do.
Part I
Part I covers total tax and credits:
- Line 3: self-employment tax from Schedule SE
- Line 4: household employment taxes (attach Schedule H)
- Line 5: Additional Medicare Tax (attach Form 8959)
- Line 10: ACTC from Part II, if any
Reconcile every transferred figure to its schedule. Check the current form for line numbers, as they can change by year.
Part II, if applicable
Complete it only if you are a bona fide Puerto Rico resident with a qualifying child and have paid Social Security/Medicare withholding or SE tax. Key conditions (confirm amounts on the current-year instructions):
- Child under 17 at year-end, living with you over half the year
- Employment-valid SSN for each child by the due date, including extensions
- $1,700 per qualifying child (starting published amount)
- Income thresholds of $400,000 joint or $200,000 otherwise
Attach copies of Puerto Rico Forms 499R-2/W-2PR where required.
Sign and file
The taxpayer signs, and both spouses sign a joint return. You can e-file, or mail a paper return:
- Payment enclosed: Internal Revenue Service, P.O. Box 1303, Charlotte, NC 28201-1303
- No payment: Department of the Treasury, Internal Revenue Service, Austin, TX 73301-0215
Payments must be in U.S. dollars. Options include Direct Pay, EFTPS, card or digital wallet, cheque or money order, and same-day wire.
Deadlines, Extensions, Payments, and Attachments
For calendar tax year 2025, Form 1040-SS was due 15 April 2026. For 2027, confirm the due date in the current Form 1040-SS instructions and adjust for weekends and holidays.
- Form 4868: extends filing to 15 October, but not payment.
- Overseas two-month extension: If you are outside the U.S. and Puerto Rico on the due date, you get until 15 June to file and pay. Attach a bona fide residence statement for American Samoa, CNMI, Guam or the USVI (interest still runs from the original due date).
- Failure to file: 5% per month, up to 25%.
- Failure to pay: 0.5% per month, up to 25%.
- Interest: 7% annually, compounded daily, for Q4 2026 underpayments. The 2027 rate is not yet confirmed.
Attachment checklist:
- Schedule C or F, and Schedule SE
- Form 8959 and Schedule H, if applicable
- Wage statements and credit documentation
- Records of estimated and extension payments
Common Errors, Records, and When to Seek Help
Form-selection mistakes
- Assuming Australian residence or U.S. clients require Form 1040-SS
- Using the retired Form 1040-PR or the wrong year's revision
- Skipping the residency check, or ignoring a possible Form 1040 or 1040-NR requirement
Calculation and submission mistakes
- Reporting gross receipts instead of net earnings
- Omitting Schedule SE or Form 8959
- Using an outdated wage base or credit figure
- Forgetting wages already subject to Social Security tax
- Leaving out signatures or required schedules
Records
| Situation | Keep for |
|---|---|
| Ordinary records | 3 years |
| Omitted income over 25% of gross | 6 years |
| Employment tax records (Schedule H) | At least 4 years |
| No return filed or fraud | Indefinitely |
Also keep payment confirmations, extension paperwork, wage statements and residency evidence.
When to get help
Seek professional review if you have:
- Split-year residency, or ties to multiple countries or territories
- Several businesses, or unclear Form 1040 versus 1040-SS status
- Unfiled prior returns, IRS notices, or amended returns
- Puerto Rico credit claims
VJM Global offers U.S.-compliant tax support, including Form 1040 and 1040-NR preparation and help with IRS notices, for suitable cross-border cases involving Australian clients.
Frequently Asked Questions
Where does SS go on 1040?
Form 1040-SS is a separate return. When Form 1040 is required, Schedule SE tax goes to Schedule 2, line 4 (2025). Check your year's instructions for the exact line.
Who must file Form 1040-SS in 2027?
Bona fide residents of an eligible territory with a filing trigger, such as $400 of net self-employment earnings, who are not required to file Form 1040. Verify the tax year and latest instructions.
Can someone living in Australia use Form 1040-SS?
Not on Australian residence alone. Territorial residency, income and the correct U.S. filing position must all be reviewed.
What schedules and forms attach to Form 1040-SS?
Commonly Schedule C or F, Schedule SE, Form 8959, Schedule H, wage statements, and Puerto Rico credit documentation where applicable.
Is Form 1040-PR still used?
No. The IRS says to use Form 1040-SS instead for tax year 2023 and later.
Does Form 4868 extend the payment deadline for Form 1040-SS?
No. It extends filing time only. Estimate your liability and pay by the original due date to limit penalties and interest.
