What is considered compensation for a self-employed individual under a SARSEP?
Compensation of self-employed individuals. Self-employed individuals’ compensation is their earned income as defined below. Compensation does not include tax-free items (or deductions related to them) other than foreign earned income and housing cost amounts. Earned income. Earned income is net earnings from self-employment from a business in which the self-employed individual’s services materially helped to produce the income. Earned income can also be from property the self-employed individual’s personal efforts helped create, such as royalties from books or inventions. Earned income includes net earnings from selling or otherwise disposing of the property, but it does not include capital gains. It includes income from licensing the use of property other than goodwill. Earned income includes amounts received for services by self-employed members of recognized religious sects opposed to social security benefits who are exempt from self-employment tax. If the self-employed individual h
