SSA logo: link to Social Security Online home1243. 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