1243.Summary Table for Optional Methods of Computing Non-Farm Self-Employment Income
The following table summarizes the effect of the optional method of computing the amount of self-employment income from a non-farm business to be reported for taxable years beginning after 1972:
If the gross farm income is... | And the net farm profit is... | Then the self-employment income to be reported is: | |
|---|---|---|---|
Regular method | Optional method | ||
Under $600 | Under $400 | None | None |
Under $600 | $400 to $500 | Actual net | Actual net* |
$600 to $2,400 | Under $400 | None | Two-thirds of gross |
$600 to $2,400 | $400 to $1,599 | Actual net | Two-thirds of gross |
$600 to $2,400 | $1,600 to $2,400 | Actual net | Actual net* |
More than $2,400 | Under $400 | None | $1,600 |
More than $2,400 | $400 to 1,599 | Actual net | $1,600 |
More than $2,400 | $1,600 and over | Actual net | Actual net* |
* Option cannot be used because an individual using the non-farm option may not declare less than actual net earnings from self-employment.
NOTE: Effective with tax years after 12/31/07, the maximum amount reportable using the optional method of reporting will be equal to the amount of earnings needed for four quarters of coverage (QC) for a given year. For example, for tax year 2009, the maximum amount reportable using the optional method of reporting is $4,360. To determine the amount of earnings needed to acquire a QC or four QC's for a given tax year beginning with calendar year 1977 and after, see Sections 212-212.7 and 1301-1301.2 of the Social Security Handbook. Further, the maximum "net non farm profit" is increased to less than $4,721 for tax year 2009. See 2009 IRS Schedule SE Instructions and IRS Form Schedule SE for 2009 and/or pertinent tax year(s) involved at http://www.irs.gov/.
Last Revised: Apr. 19, 2010