VITA Certification Practice Test 2026 – All-in-One Guide to Master Volunteer Income Tax Assistance!

The definition of "self-employment income" is centered around the nature of the work being performed by an individual who is not classified as an employee of another entity. Specifically, self-employment income refers to earnings derived from activities where an individual operates a business or trades as a sole proprietor, an independent contractor, or a member of a partnership.

This type of income can include profits from a business or trade, and it is typically reported on Schedule C of the taxpayer's Form 1040, where the individual calculates their net earnings after deducting allowable business expenses. Unlike wages earned from an employer, self-employment income does not come from a traditional employer-employee relationship; therefore, the individual is responsible for paying both income taxes and self-employment taxes on these earnings.

The other options presented do not correctly embody the definition of self-employment income: income earned through an employer aligns with traditional employment, wages from part-time jobs also fall under employee earnings, and income from rental properties is generally classified separately under passive income unless it pertains to a real estate business.