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Department of the Treasury
Internal Revenue Service

2022 Instructions for Schedule SE
Self-Employment
Tax

Use Schedule SE (Form 1040) to figure the tax due on net earnings from self-employment. The Social Security Administration uses the information from Schedule SE to
figure your benefits under the social security program. This tax applies no matter how
old you are and even if you are already getting social security or Medicare benefits.
Additional information. See Pub. 225 or Pub. 334.

Section references are to the Internal
Revenue Code unless otherwise noted.

Christian Science Practitioners and
Members of Certain Religious Sects, later, for information on how to report your
self-employment earnings.

Future Developments
For the latest information about developments related to Schedule SE (Form
1040) and its instructions, such as legislation enacted after they were published,
go to IRS.gov/ScheduleSE.

What's New

Even if you had a loss or a

TIP small amount of income from
self-employment, it may be to
your benefit to file Schedule SE and use
either "optional method" in the instructions for Part II of Schedule SE (discussed later).

Maximum income subject to social security tax. For 2022, the maximum
amount of self-employment income subject to social security tax is $147,000.

Who Must Pay
Self-Employment (SE) Tax

Reminder

You must pay SE tax if you had net
earnings of $400 or more as a self-employed person. If you are in business
(farm or nonfarm) for yourself, you are
self-employed.
You must also pay SE tax on your
share of certain partnership income and
your guaranteed payments. See Partnership Income or Loss, later.

Self-employed tax payments deferred
in 2020. Previous legislation allowed
for self-employed individuals to defer
the payment of certain social security
taxes from 2020 over the next 2 years.
See IRS.gov/Payments for more information about payment options.

General
Instructions
Who Must File Schedule SE
You must file Schedule SE if:
• The amount on line 4c of Schedule SE is $400 or more, or
• You had church employee income
of $108.28 or more. (Income from services you performed as a minister, member of a religious order, or Christian Science practitioner isn't church employee
income.) See Employees of Churches
and Church Organizations, later.
Exception to filing Schedule SE. If
you filed Form 4029 or Form 4361 and
received IRS approval, you may not
need to file Schedule SE. See Ministers,
Members of Religious Orders, and

Self-Employed Persons

Employees of Churches and
Church Organizations
If you had church employee income of
$108.28 or more, you must pay SE tax.
Church employee income is wages you
received as an employee (other than as a
minister, member of a religious order, or
Christian Science practitioner) of a
church or qualified church-controlled organization that has a certificate in effect
electing an exemption from employer
social security and Medicare taxes.
Ministers, Members of Religious
Orders, and Christian Science
Practitioners
In most cases, you must pay SE tax on
salaries and other income for services
you performed as a minister, member of
SE-1

Aug 25, 2022

Cat. No. 24334P

a religious order who hasn’t taken a vow
of poverty, or Christian Science practitioner. But if you filed Form 4361 and
received IRS approval, you will be exempt from paying SE tax on those net
earnings. If you had no other income
subject to SE tax, enter “Exempt—Form
4361” on Schedule 2 (Form 1040),
line 4. However, if you had other earnings of $400 or more subject to SE tax,
see line A at the top of Schedule SE.
If you have ever filed Form
2031 to elect social security
CAUTION coverage on your earnings as a
minister, you can’t revoke that election.

!

If you must pay SE tax, include this
income on Schedule SE, line 2. But
don’t report it on Schedule SE, line 5a;
it isn’t considered church employee income. Also, include on line 2:
• The rental value of a home or an
allowance for a home furnished to you
(including payments for utilities); and
• The value of meals and lodging
provided to you, your spouse, and your
dependents for your employer's convenience.
However, don’t include on line 2:
• Retirement benefits you received
from a church plan after retirement, or
• The rental value of a home or an
allowance for a home furnished to you
(including payments for utilities) after
retirement.
If you were a duly ordained minister
who was an employee of a church and
you must pay SE tax, the unreimbursed
business expenses that you incurred as a
church employee are not deductible as
an itemized deduction for income tax
purposes. However, when figuring SE
tax, subtract on line 2 the allowable expenses from your self-employment earnings and attach an explanation.

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If you were a U.S. citizen or resident
alien serving outside the United States
as a minister or member of a religious
order and you must pay SE tax, you
can’t reduce your net earnings by the
foreign earned income exclusion or the
foreign housing exclusion or deduction.
See Pub. 517 for additional details regarding social security for members of
the clergy and religious workers.
Members of Certain Religious
Sects
If you have conscientious objections to
social security insurance because of
your membership in and belief in the
teachings of a religious sect recognized
as being in existence at all times since
December 31, 1950, and which has provided a reasonable level of living for its
dependent members, you are exempt
from SE tax if you received IRS approval by filing Form 4029. In this case,
don’t file Schedule SE. Instead, enter
“Exempt—Form 4029” on Schedule 2
(Form 1040), line 4. See Pub. 517 for
details.
U.S. Citizens Employed by
Foreign Governments or
International Organizations
You must pay SE tax on income you
earned as a U.S. citizen employed by a
foreign government (or, in certain cases,
by a wholly owned instrumentality of a
foreign government or an international
organization under the International Organizations Immunities Act) for services
performed in the United States, Puerto
Rico, Guam, American Samoa, the
Commonwealth of the Northern Mariana
Islands, or the U.S. Virgin Islands. Report income from this employment on
Schedule SE, line 2. If you performed
services elsewhere as an employee of a
foreign government or an international
organization, those earnings are exempt
from SE tax.
Exception—Dual citizens. A person
with dual U.S.-foreign citizenship is
generally considered to be a U.S. citizen
for social security purposes. However, if
you are a U.S. citizen and also a citizen
of a country with which the United
States has a bilateral social security
agreement, other than Canada or Italy,
your work for the government of that
foreign country is always exempt from

U.S. social security taxes. For further information about these agreements, see
the exception shown in the next section.
U.S. Citizens or Resident Aliens
Living Outside the United States
If you are a self-employed U.S. citizen
or resident alien living outside the United States, in most cases you must pay
SE tax. Foreign earnings from self-employment can’t be reduced by your foreign earned income exclusion when
computing SE tax.
Exception. The United States has social
security agreements with many countries
to eliminate dual taxes under two social
security systems. Under these agreements, you must generally pay social security and Medicare taxes to only the
country in which you live.
The United States now has social security agreements with the following
countries: Australia, Austria, Belgium,
Brazil, Canada, Chile, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland,
Italy, Japan, Luxembourg, the Netherlands, Norway, Poland, Portugal, the
Slovak Republic, Slovenia, South Korea, Spain, Sweden, Switzerland, the
United Kingdom, and Uruguay.
If you have questions about international social security agreements, or to
see if any additional agreements have
been entered into, you can visit the Social Security Administration's (SSA's)
International Programs website at
SSA.gov/international. The website also
provides contact information for questions about benefits and the agreements.
If your self-employment income is
exempt from SE tax, you should get a
statement from the appropriate agency
of the foreign country verifying that
your self-employment income is subject
to social security coverage in that country. If the foreign country won’t issue
the statement, visit the SSA Office of
Earnings and International Operations at
SSA International Programs Online
Certificate of Coverage Service. Don’t
complete Schedule SE. Instead, attach a
copy of the statement to Form 1040 or
Form 1040-SR and enter “Exempt, see
attached statement” on Schedule 2
(Form 1040), line 4.

SE-2

Nonresident Alien
If you are a self-employed nonresident
alien living in the United States, you
must pay SE tax if an international social security agreement in effect determines that you are covered under the
U.S. social security system. See Exception under U.S. Citizens or Resident Aliens Living Outside the United States,
earlier, for information about international social security agreements. If your
self-employment income is subject to
SE tax, complete Schedule SE and file it
with your Form 1040-NR.
Chapter 11 Bankruptcy Cases
While you are a debtor in a chapter 11
bankruptcy case, your net profit or loss
from self-employment (for example,
from Schedule C or Schedule F) won't
be included in your Form 1040 or Form
1040-SR income. Instead, it will be included on the income tax return (Form
1041) of the bankruptcy estate. However, you (not the bankruptcy estate) are
responsible for paying SE tax on your
net earnings from self-employment.
Enter on the dotted line to the left of
Schedule SE, line 3, “Chap. 11 bankruptcy income” and the amount of your
net profit or (loss). Combine that
amount with the total of lines 1a, 1b, and
2 (if any) and enter the result on line 3.
For other reporting requirements, see
Chapter 11 Bankruptcy Cases in the Instructions for Form 1040.

More Than One Business
If you had two or more businesses subject to SE tax, your net earnings from
self-employment are the combined net
earnings from all of your businesses. If
you had a loss in one business, it reduces the income from another. Figure
the combined SE tax on one Schedule SE.

Joint Returns
Show the name of the spouse with
self-employment income on Schedule SE. If both spouses have SE income,
each must file a separate Schedule SE.
Include the total profits or losses
from all businesses on Form 1040 or
Form 1040-SR. Enter the combined SE
tax on Schedule 2 (Form 1040), line 4.

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Community Income
If any of the income from a business (including farming) is community income,
then the income and deductions are reported as follows.
• If only one spouse participates in
the business, all of the income from that
business is the self-employment earnings of the spouse who carried on the
business.
• If both spouses participate, the income and deductions are allocated to the
spouses based on their distributive
shares.
• If either or both spouses are partners in a partnership, see Partnership Income or Loss, later.
• If both spouses elected to treat the
business as a qualifying joint venture,
see Qualified Joint Ventures, later.
Married filing separately. If you and
your spouse had community income and
file separate returns, attach Schedule SE
to the return of each spouse with
self-employment earnings under the
rules described earlier. Also, attach
Schedule(s) C or F (showing the spouse's share of community income and expenses) to the return of each spouse.
Spouse who carried on the business.
If you are the only spouse who carried
on the business, you must include on
Schedule SE, line 3, the net profit or
(loss) reported on the other spouse's
Schedule C or F (except in those cases
described later under Income and Losses
Not Included in Net Earnings From
Self-Employment). Enter on the dotted
line to the left of Schedule SE, line 3,
“Community income taxed to spouse”
and the amount of any net profit or
(loss) allocated to your spouse as community income. Combine that amount
with the total of lines 1a, 1b, and 2. Enter the result on line 3.
Spouse who didn’t carry on the busi­
ness. If you aren’t the spouse who carried on the business and you had no other income subject to SE tax, enter “Exempt community income” on Schedule 2
(Form 1040), line 4. Don’t file Schedule SE.
But if you have $400 or more of other earnings subject to SE tax, you must
file Schedule SE. Include on Schedule SE, line 1a or 2, the net profit or
(loss) from Schedule(s) C or F allocated
to you as community income. On the

dotted line to the left of Schedule SE,
line 3, enter “Exempt community income” and the allocated amount. Figure
the amount to enter on line 3 as follows.
• If the allocated amount is a net
profit, subtract it from the total of lines
1a, 1b, and 2.
• If the allocated amount is a loss,
treat it as a positive amount and add it to
the total of lines 1a, 1b, and 2.
Community income included on
Schedule(s) C or F must be
CAUTION divided for income tax purposes based on the community property
laws of your state. See Pub. 555 for
more information.

!

Qualified Joint Ventures
If you and your spouse materially participate as the only members of a jointly
owned and operated business, and you
file a joint return for the tax year, you
can make a joint election to be taxed as
a qualified joint venture instead of a
partnership. For information on what it
means to materially participate, see Material participation in the Instructions
for Schedule C.
To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the
business between you and your spouse
in accordance with your respective interests in the venture. Each of you must file
a separate Schedule C or F. On each line
of your separate Schedule C or F, you
must enter your share of the applicable
income, deduction, or loss. Each of you
must also file a separate Schedule SE to
pay SE tax, as applicable.
For more information on qualified
joint ventures, go to IRS.gov/QJV.
Rental real estate business. If you and
your spouse make the election to be
taxed as a qualified joint venture for
your rental real estate business, the income generally isn’t subject to SE tax.
To indicate that election, be sure to
check the “QJV” box in Part I, line 2, of
each Schedule E that the rental property
is listed on. Don’t file Schedule SE unless you have other income subject to
SE tax. For an exception to this income
not being subject to SE tax, see item 3
under Other Income and Losses Included in Net Earnings From Self-Employment, later.

SE-3

If you and your spouse make the
election for a farm rental business that
you report on Form 4835, Farm Rental
Income and Expenses, each of you must
file a separate Form 4835 to report your
share of farm rental income based on
crops or livestock produced by the tenant. Don’t file Schedule SE unless you
have other income subject to the SE tax.

Fiscal Year Filers
If your tax year is a fiscal year, use the
tax rate and annual earnings limit that
apply at the time the fiscal year begins.
Don’t prorate the tax or annual earnings
limit for a fiscal year that overlaps the
date of a change in the tax or annual
earnings limit.

Line Instructions
You will need to figure your net earnings from self-employment. To find out
what is included as net earnings from
self-employment, see Net Earnings
From Self-Employment, later.
Enter all negative amounts in

TIP (parentheses).

Instructions for Part I
You Have Only Church
Employee Income Subject
to SE Tax
If your only income subject to SE tax is
church employee income (described earlier under Employees of Churches and
Church Organizations), skip lines 1
through 4b. Enter -0- on line 4c and go
to line 5a.
Note. Income from services you perform as a minister, member of a religious order, or Christian Science practitioner isn’t church employee income.

Line 1b
If you were receiving social security retirement or social security disability
benefits at the time you received your
Conservation Reserve Program (CRP)
payment(s), enter the amount of your
taxable CRP payment(s) on line 1b.
These payments are included on Schedule F, line 4b, or listed on Schedule K-1
(Form 1065), box 20, code AH.

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Lines 4a Through 4c
If both lines 4a and 4c are less than $400
and you have an amount on line 1b,
combine lines 1a and 2.
• If the total of lines 1a and 2 is
$434 or more, file Schedule SE (completed through line 4c) with your tax return. Enter -0- on Schedule 2 (Form
1040), line 4.*
• If the total of lines 1a and 2 is less
than $434, don’t file Schedule SE unless you choose to use an optional method to figure your SE tax.
*If you also have church employee income (described earlier under Employees of Churches and Church Organizations), also complete lines 5a and 5b.
Complete the rest of Schedule SE, as appropriate.

Additional Medicare Tax
A 0.9% Additional Medicare Tax may
apply to you if the total amount on line 6
of all your Schedules SE exceeds one of
the following threshold amounts (based
on your filing status).
• Married filing jointly—$250,000
• Married filing
separately—$125,000
• Single, Head of household, or
Qualifying surviving spouse—$200,000
If you have both wages and self-employment income, the threshold amount
for applying the Additional Medicare
Tax on the self-employment income is
reduced (but not below zero) by the
amount of wages subject to Additional
Medicare Tax.
Use Form 8959, Additional Medicare
Tax, to figure this tax. For more information, see the Instructions for Form
8959, or go to IRS.gov/ADMT.

Net Earnings From
Self-Employment
In most cases, net earnings include your
net profit from a farm or nonfarm business.

Partnership Income or Loss
If you were a general or limited partner
in a partnership, include on line 1a or
line 2, whichever applies, the amount of
net earnings from self-employment from
Schedule K-1 (Form 1065), box 14,
code A. General partners should reduce
this amount by certain expenses before

entering it on Schedule SE. See your
Schedule K-1 instructions. If you reduce
the amount you enter on Schedule SE,
you must attach an explanation. Limited
partners should include only guaranteed
payments for services actually rendered
to or on behalf of the partnership.
If a partner died and the partnership
continued, include in self-employment
income the deceased's distributive share
of the partnership's ordinary income or
loss through the end of the month in
which he or she died. See section
1402(f).
If you were married and both you and
your spouse were partners in a partnership, each of you must report your net
earnings from self-employment from the
partnership. Each of you must file a separate Schedule SE and report the partnership income or loss on Schedule E
(Form 1040), Part II, for income tax purposes. If only one of you was a partner
in a partnership, the spouse who was the
partner must report his or her net earnings from self-employment from the
partnership.
Community income. Your own distributive share of partnership income is included in figuring your net earnings
from self-employment. Unlike the division of that income between spouses for
figuring income tax, no part of your
share can be included in figuring your
spouse's net earnings from self-employment.

Share Farming
You are considered self-employed if you
produce crops or livestock on someone
else's land for a share of the crops or
livestock produced (or a share of the
proceeds from the sale of them). This
applies even if you paid another person
(an agent) to do the actual work or management for you. Report your net earnings for income tax purposes on Schedule F (Form 1040) and for SE tax purposes on Schedule SE. See Pub. 225 for
details.

Other Income and Losses
Included in Net Earnings
From Self-Employment
1. Rental income from a farm if, as
landlord, you materially participated in
the production or management of the
production of farm products on this

SE-4

land. This income is farm earnings. To
determine whether you materially participated in farm management or production, don’t consider the activities of
any agent who acted for you. The material participation tests for landlords are
explained in Pub. 225.
2. Cash or a payment-in-kind from
the Department of Agriculture for participating in a land diversion program.
3. Payments for the use of rooms or
other space when you also provided substantial services for the convenience of
your tenants. Examples are hotel rooms,
boarding houses, tourist camps or
homes, trailer parks, parking lots, warehouses, and storage garages. See Pub.
334 for more information.
4. Income from the retail sale of
newspapers and magazines if you were
age 18 or older and kept the profits.
5. Income you receive as a direct
seller. Newspaper carriers or distributors
of any age are direct sellers if certain
conditions apply. See Pub. 334 for details.
6. Amounts received by current or
former self-employed insurance agents
and salespersons that are:
a. Paid after retirement but figured
as a percentage of commissions received
from the paying company before retirement,
b. Renewal commissions, or
c. Deferred commissions paid after
retirement for sales made before retirement.
However, certain termination payments received by former insurance
salespersons aren’t included in net earnings from self-employment (as explained in item 10 under Income and
Losses Not Included in Net Earnings
From Self-Employment, later).
7. Income of certain crew members
of fishing vessels with crews of normally fewer than 10 people. See Pub. 334
for details.
8. Fees as a state or local government employee if you were paid only on
a fee basis and the job wasn’t covered
under a federal-state social security coverage agreement.
9. Interest received in the course of
any trade or business, such as interest on
notes or accounts receivable.

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10. Fees and other payments received
by you for services as a director of a
corporation.
11. Recapture amounts under sections
179 and 280F that you included in gross
income because the business use of the
property dropped to 50% or less. Don’t
include amounts you recaptured on the
disposition of property. See Form 4797.
12. Generally, fees you received as a
professional fiduciary. This may also apply to fees paid to you as a nonprofessional fiduciary if the fees relate to active participation in the operation of the
estate's business, or the management of
an estate that required extensive management activities over a long period of
time.
13. Gain or loss from section 1256
contracts or related property by an options or commodities dealer in the normal course of dealing in or trading section 1256 contracts.

Income and Losses Not
Included in Net Earnings
From Self-Employment
1. Salaries, fees, and other income
subject to social security or Medicare
tax that you received for performing
services as an employee, including services performed as an employee under the
railroad retirement system. This includes
services performed as a public official
(except as a fee-basis government employee as explained in item 8 under Other Income and Losses Included in Net
Earnings From Self-Employment, earlier).
2. Fees received for services performed as a notary public. If you had no
other income subject to SE tax, enter
“Exempt—Notary” on Schedule 2
(Form 1040), line 4. Don’t file Schedule SE. However, if you had other earnings of $400 or more subject to SE tax,
enter “Exempt—Notary” and the
amount of your net profit as a notary
public from Schedule C on the dotted
line to the left of Schedule SE, line 3.
Subtract that amount from the total of
lines 1a, 1b, and 2, and enter the result
on line 3.
3. Income you received as a retired
partner under a written partnership plan
that provides for lifelong periodic retirement payments if you had no other inter-

est in the partnership and didn’t perform
services for it during the year.
4. Income from real estate rentals if
you didn’t receive the income in the
course of a trade or business as a real estate dealer. Report this income on
Schedule E.
5. Income from farm rentals (including rentals paid in crop shares) if, as
landlord, you didn’t materially participate in the production or management of
the production of farm products on the
land. See Pub. 225 for details. Report
this income on Form 4835. Use two
Forms 4835 if you and your spouse
made an election to be taxed as a qualified joint venture.
6. Payments you receive from the
CRP if you are receiving social security
benefits for retirement or disability. Deduct these payments on line 1b of
Schedule SE.
7. Dividends on shares of stock and
interest on bonds, notes, or other evidence of indebtedness issued with interest coupons or in registered form by any
corporation (including those issued by a
government or its political subdivision),
if you didn’t receive the income in the
course of your trade or business as a
dealer in stocks or securities.
8. Gain or loss from:
a. The sale or exchange of a capital
asset;
b. The sale, exchange, involuntary
conversion, or other disposition of property unless the property is stock in trade
or other property that would be includible in inventory, or held primarily for
sale to customers in the ordinary course
of the business; or
c. Certain transactions in timber,
coal, or domestic iron ore.
9. Net operating losses from other
years.
10. Termination payments you received as a former insurance salesperson
if all of the following conditions are
met.
a. The payment was received from
an insurance company because of services you performed as an insurance
salesperson for the company.
b. The payment was received after
termination of your agreement to perform services for the company.

SE-5

c. You didn’t perform any services
for the company after termination and
before the end of the year in which you
received the payment.
d. You entered into a covenant not
to compete against the company for at
least a 1-year period beginning on the
date of termination.
e. The amount of the payment depended primarily on policies sold by or
credited to your account during the last
year of the agreement, or the extent to
which those policies remain in force for
some period after termination, or both.
f. The amount of the payment didn’t
depend to any extent on length of service or overall earnings from services
performed for the company (regardless
of whether eligibility for the payment
depended on length of service).

Statutory Employee Income
If you were a statutory employee, don’t
include the net profit or (loss) from
Schedule C, line 31, on Schedule SE,
line 2. But be sure to include on line 8a
statutory employee social security wages
and tips from Form W-2.

Instructions for Part II
Optional Methods
How the Optional Methods Can
Help You
Social security coverage. The optional
methods may give you credit toward
your social security coverage even
though you have a loss or a small
amount of income from self-employment.
Credits affected by earned income.
Using the optional methods may qualify
you to claim the earned income credit
(EIC), additional child tax credit
(ACTC), or child and dependent care
credit or give you a larger credit if your
net earnings from self-employment (determined without using the optional
methods) are less than $6,040. Figure
the EIC, ACTC, and child and dependent care credit with and without using
the optional methods to see if the optional methods will benefit you.
Self-employed health insurance deduction. The optional methods of computing
net
earnings
from

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self-employment may be used to figure
your self-employed health insurance deduction.
Other items affected by adjusted
gross income (AGI). Using the optional methods may decrease your AGI,
which may affect your eligibility for
credits, deductions, or other items that
are subject to an AGI limit. Figure your
AGI with and without using the optional
methods to see if the optional methods
will benefit you.
Using the optional methods as
described above may be benefiCAUTION cial, but they may also increase
your SE tax.

!

Changing Your Method
You can change the method used to figure your net earnings from self-employment after you file your return. That is,
you can change from the regular to the
optional method or from the optional to
the regular method. To do this, file Form
1040-X.
Farm Optional Method
You may use this method to figure your
net earnings from farm self-employment
if your gross farm income was $9,060 or
less or your net farm profits were less
than $6,540. Net farm profits are:
• The total of the amounts from
Schedule F (Form 1040), line 34, and
Schedule K-1 (Form 1065), box 14,
code A, minus
• The amount you would have entered on Schedule SE, line 1b, had you
not used the optional method.

There is no limit on how many years
you can use this method.
Under this method, report in Part II,
line 15, two-thirds of your gross farm income, up to $6,040, as your net earnings. This method can increase or decrease your net earnings from farm
self-employment even if the farming
business had a loss.
For a farm partnership, figure your
share of gross income based on the partnership agreement. With guaranteed
payments, your share of the partnership's
gross income is your guaranteed payments plus your share of the gross income after it is reduced by all guaranteed payments made by the partnership.
If you were a limited partner, include
only guaranteed payments for services
you actually rendered to or on behalf of
the partnership.
Nonfarm Optional Method
You may be able to use this method to
figure your net earnings from nonfarm
self-employment if your net nonfarm
profits were less than $6,540 and also
less than 72.189% of your gross nonfarm income. Net nonfarm profits are
the total of the amounts from:
• Schedule C (Form 1040), line 31;
and
• Schedule K-1 (Form 1065),
box 14, code A (from other than farm
partnerships).
To use this method, you must also be
regularly self-employed. You meet this
requirement if your actual net earnings
from self-employment were $400 or

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more in 2 of the 3 years before the year
you use the nonfarm optional method.
The net earnings of $400 or more could
be from either farm or nonfarm earnings, or both. The net earnings include
your distributive share of partnership income or loss subject to SE tax.
You can use the nonfarm optional
method to figure your earnings from
self-employment for only 5 years. The 5
years don’t have to be consecutive.
Under this method, report in Part II,
line 17, two-thirds of your gross nonfarm income, up to the amount on
line 16, as your net earnings. But you
can’t report less than your actual net
earnings from nonfarm self-employment.
Figure your share of gross income
from a nonfarm partnership in the same
manner as a farm partnership. See Farm
Optional Method, earlier, for details.
Using Both Optional Methods
If you can use both methods, you can report less than your total actual net earnings from farm and nonfarm self-employment, but you can’t report less than
your actual net earnings from nonfarm
self-employment alone.
If you use both methods to figure net
earnings, you can’t report more than
$6,040 of net earnings from self-employment.