Rev. Rul. 55-521

The Internal Revenue Service has been requested to state whether a person who has elected social security coverage as a self-employed individual under the waiver provisions of section 1402(e) of the Self-Employment Contributions Act of 1954 (chapter 2, subtitle A, Internal Revenue Code of 1954) may pay his self-employment tax on a pay-as-you-go basis.

Section 6017 of the Code provides that every individual (other than a nonresident alien individual) having net earnings from self-employment of $400 or more for the taxable year shall make a return with respect to the self-employment tax imposed by chapter 2 of the Code. He is required to report his self-employment income on separate Schedule C of Form 1040, U.S. Individual Income Tax Return. However, taxes on self-employment income for social security purposes are not required to be included in computing an individual's estimated income taxes.

Section 6315 of the Code provides that payment of the estimated income tax, or any installment thereof, shall be considered payment on account of income taxes imposed by subtitle A, which subtitle includes chapter 2, supra .

Section 301.6315-1 of the regulations prescribed by Treasury Decision 6119, C.B. 1955-1, 145, holds that the aggregate amount of the payments on account of estimated income tax shall be entered upon the income tax return for the taxable year as payments to be applied against the tax shown on such return.

An individual is not prevented from filing Form 1040-ES, Declaration of Estimated Income Tax, and paying his Federal income tax currently even though he may not otherwise be required to file such a declaration. Since payments on account of estimated income tax are also considered as payments on self-employment tax, any individual may follow the pay-as-you-go plan for paying his self-employment tax by filing a declaration of estimated income tax in sufficient amount to include his estimated self-employment tax and paying the estimated taxes in installments as required in the particular case.

This Revenue Ruling extends the provisions of law relating to declarations and installment payments of estimated income tax to self-employed persons who have elected social security coverage under the waiver procedure (certain ministers, members of religious orders who have not taken vows of poverty, and Christian Science practitioners). If such a person receives wages from an employer with respect to some other activity and such wages are subject to the withholding of income tax, he may accomplish the current payment of his self-employment tax by entering into agreement with that employer whereby additional amounts of tax may be withheld from his wages under the permissive provisions of sections 3402(i) of the Code; in fact, those provisions may be availed of by any self-employed person working for an employer and receiving wages subject to the withholding of income tax