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:

Optional Method: Non-Farm Self-Employment Income

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 2008, the maximum amount reportable using the optional method of reporting is $4200. 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 RS 00301.250. Further, the maximum "net non farm profit" is increased to less than $4,548 for tax year 2008. See 2008 IRS Schedule SE Instructions and IRS Form Schedule SE for 2008 and/or pertinent tax year(s) involved at http://www.irs.gov/.

Last Revised: Aug. 31, 2009