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Department of the Treasury
Internal Revenue Service

2024 Instructions for Schedule SE
Use Schedule SE (Form 1040) to figure the tax due on net earnings from self-employ-
Self-Employment ment. The Social Security Administration (SSA) uses the information from Sched-
ule SE to figure your benefits under the social security program. This tax applies no
Tax 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 Who Must Pay Self-Employment (SE) Tax
otherwise noted.
Self-Employed Persons
Future Developments You must pay SE tax if you had net earnings of $400 or more
For the latest information about developments related to Sched- as a self-employed person. If you are in business (farm or non-
ule SE (Form 1040) and its instructions, such as legislation farm) for yourself, you are self-employed.
enacted after they were published, go to IRS.gov/ScheduleSE. You must also pay SE tax on your share of certain partner-
ship income and your guaranteed payments. See Partnership
Income or Loss, later.
What's New
Maximum income subject to social security tax. For 2024, Employees of Churches and Church Organizations
the maximum amount of self-employment income subject to
social security tax is $168,600. If you had church employee income of $108.28 or more, you
must pay SE tax. Church employee income is wages you re-
ceived as an employee (other than as a minister, member of a
Reminders religious order, or Christian Science practitioner) of a church or
Form 1040-SS. Using Schedule SE (Form 1040) to report qualified church-controlled organization that has a certificate in
self-employment tax for residents of U.S. territories. Sched- effect electing an exemption from employer social security and
ule SE (Form 1040) must be filed with Form 1040-SS to report Medicare taxes.
self-employment taxes by residents of the U.S. Virgin Islands,
Guam, American Samoa, the Commonwealth of the Northern Ministers, Members of Religious Orders, and
Mariana Islands (CNMI), and Puerto Rico. For additional in- Christian Science Practitioners
formation, see the Instructions for Form 1040-SS.
In most cases, you must pay SE tax on salaries and other in-
come for services you performed as a minister, member of a re-
General Instructions ligious order who hasn’t taken a vow of poverty, or Christian
Science practitioner. But if you filed Form 4361 and received
Who Must File Schedule SE IRS approval, you will be exempt from paying SE tax on those
You must file Schedule SE if: net earnings. If you had no other income subject to SE tax, en-
• The amount on line 4c of Schedule SE is $400 or more, ter “Exempt—Form 4361” on Schedule 2 (Form 1040), line 4.
or However, if you had other earnings of $400 or more subject to
• You had church employee income of $108.28 or more. SE tax, see line A at the top of Schedule SE.
(Income from services you performed as a minister, member of If you have ever filed Form 2031 to elect social secur-
a religious order, or Christian Science practitioner isn't church ! ity coverage on your earnings as a minister, you can’t
employee income.) See Employees of Churches and Church CAUTION revoke that election.
Organizations, later.
Exception to filing Schedule SE. If you filed Form 4029 or If you must pay SE tax, include this income on Sched-
Form 4361 and received IRS approval, you may not need to ule SE, line 2. But don’t report it on Schedule SE, line 5a; it
file Schedule SE. See Ministers, Members of Religious Orders, isn’t considered church employee income. Also, include on
and Christian Science Practitioners and Members of Certain line 2:
Religious Sects, later, for information on how to report your • The rental value of a home or an allowance for a home
self-employment earnings. furnished to you (including payments for utilities); and
• The value of meals and lodging provided to you, your
Even if you had a loss or a small amount of income spouse, and your dependents for your employer's convenience.
TIP from self-employment, it may be to your benefit to file
Schedule SE and use either "optional method" in the However, don’t include on line 2:
instructions for Part II of Schedule SE (discussed later). • Retirement benefits you received from a church plan after
retirement, or

Oct 24, 2024 Cat. No. 24334P SE-1

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• The rental value of a home or an allowance for a home Exception. The United States has social security agreements
furnished to you (including payments for utilities) after retire- with many countries to eliminate dual taxes under two social
ment. security systems. Under these agreements, you must generally
If you were a duly ordained minister who was an employee pay social security and Medicare taxes to only the country in
of a church and you must pay SE tax, the unreimbursed busi- which you live.
ness expenses that you incurred as a church employee are not The United States now has social security agreements with
deductible as an itemized deduction for income tax purposes. the following countries: Australia, Austria, Belgium, Brazil,
However, when figuring SE tax, subtract on line 2 the allowa- Canada, Chile, the Czech Republic, Denmark, Finland, France,
ble expenses from your self-employment earnings and attach Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Lux-
an explanation. embourg, the Netherlands, Norway, Poland, Portugal, the Slo-
If you were a U.S. citizen or resident alien serving outside vak Republic, Slovenia, South Korea, Spain, Sweden, Switzer-
the United States as a minister or member of a religious order land, the United Kingdom, and Uruguay.
and you must pay SE tax, you can’t reduce your net earnings If you have questions about international social security
by the foreign earned income exclusion or the foreign housing agreements, or to see if any additional agreements have been
exclusion or deduction. entered into, you can go to the SSA's International Programs
See Pub. 517 for additional details regarding social security website at SSA.gov/international. The website also provides
for members of the clergy and religious workers. contact information for questions about benefits and the agree-
ments.
Members of Certain Religious Sects If your self-employment income is exempt from SE tax, you
If you have conscientious objections to social security insur- should get a statement from the appropriate agency of the for-
ance because of your membership in and belief in the teachings eign country verifying that your self-employment income is
of a religious sect recognized as being in existence at all times subject to social security coverage in that country. If the for-
since December 31, 1950, and which has provided a reasonable eign country won’t issue the statement, go to the SSA Office of
level of living for its dependent members, you are exempt from Earnings and International Operations at SSA International
SE tax if you received IRS approval by filing Form 4029. In Programs Online Certificate of Coverage Service. Don’t com-
this case, don’t file Schedule SE. Instead, enter “Ex- plete Schedule SE. Instead, attach a copy of the statement to
empt—Form 4029” on Schedule 2 (Form 1040), line 4. See Form 1040, 1040-SR, or 1040-NR, and enter “Exempt, see at-
Pub. 517 for details. tached statement” on Schedule 2 (Form 1040), line 4.

U.S. Citizens Employed by Foreign Governments or Nonresident Alien
International Organizations If you are a self-employed nonresident alien living in the Uni-
You must pay SE tax on income you earned as a U.S. citizen ted States, you must pay SE tax if an international social secur-
employed by a foreign government (or, in certain cases, by a ity agreement in effect determines that you are covered under
wholly owned instrumentality of a foreign government or an the U.S. social security system. See Exception under U.S. Citi-
international organization under the International Organizations zens or Resident Aliens Living Outside the United States, earli-
Immunities Act) for services performed in the United States, er, for information about international social security agree-
Puerto Rico, Guam, American Samoa, the Commonwealth of ments. If your self-employment income is subject to SE tax,
the Northern Mariana Islands, or the U.S. Virgin Islands. Re- complete Schedule SE and file it with your Form 1040-NR.
port income from this employment on Schedule SE, line 2. If
you performed services elsewhere as an employee of a foreign Chapter 11 Bankruptcy Cases
government or an international organization, those earnings are While you are a debtor in a chapter 11 bankruptcy case, your
exempt from SE tax. net profit or loss from self-employment (for example, from
Exception—Dual citizens. A person with dual U.S.-foreign Schedule C or Schedule F) won't be included in your Form
citizenship is generally considered to be a U.S. citizen for so- 1040 or 1040-SR income. Instead, it will be included on the in-
cial security purposes. However, if you are a U.S. citizen and come tax return (Form 1041) of the bankruptcy estate. Howev-
also a citizen of a country with which the United States has a er, you (not the bankruptcy estate) are responsible for paying
bilateral social security agreement, other than Canada or Italy, SE tax on your net earnings from self-employment.
your work for the government of that foreign country is always Enter on the dotted line to the left of Schedule SE, line 3,
exempt from U.S. social security taxes. For further information “Chap. 11 bankruptcy income” and the amount of your net
about these agreements, see the exception shown in the next profit or (loss). Combine that amount with the total of lines 1a,
section. 1b, and 2 (if any) and enter the result on line 3.
For other reporting requirements, see Chapter 11 Bankrupt-
U.S. Citizens or Resident Aliens Living Outside the cy Cases in the Instructions for Form 1040.
United States
More Than One Business
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. If you had two or more businesses subject to SE tax, your net
Foreign earnings from self-employment can’t be reduced by earnings from self-employment are the combined net earnings
your foreign earned income exclusion when computing SE tax. from all of your businesses. If you had a loss in one business, it

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reduces the income from another. Figure the combined SE tax Community income included on Schedule(s) C or F
on one Schedule SE. ! must be divided for income tax purposes based on the
CAUTION community property laws of your state. See Pub. 555
Joint Returns for more information.
Show the name of the spouse with self-employment income on
Schedule SE. If both spouses have self-employment income, Qualified Joint Ventures (QJV)
each must file a separate Schedule SE.
If you and your spouse materially participate as the only mem-
Include the total profits or losses from all businesses on bers of a jointly owned and operated business, and you file a
Form 1040 or 1040-SR. Enter the combined SE tax on Sched- joint return for the tax year, you can make a joint election to be
ule 2 (Form 1040), line 4. taxed as a QJV instead of a partnership. For information on
what it means to materially participate, see Material participa-
Community Income tion in the Instructions for Schedule C (Form 1040).
If any of the income from a business (including farming) is
community income, then the income and deductions are repor- To make this election, you must divide all items of income,
ted as follows. gain, loss, deduction, and credit attributable to the business be-
• If only one spouse participates in the business, all of the tween you and your spouse in accordance with your respective
income from that business is the self-employment earnings of interests in the venture. Each of you must file a separate Sched-
the spouse who carried on the business. ule C or F. On each line of your separate Schedule C or F, you
• If both spouses participate, the income and deductions are must enter your share of the applicable income, deduction, or
allocated to the spouses based on their distributive shares. loss. Each of you must also file a separate Schedule SE to pay
• If either or both spouses are partners in a partnership, see SE tax, as applicable.
Partnership Income or Loss, later. For more information on qualified joint ventures, go to
• If both spouses elected to treat the business as a qualify- IRS.gov/QJV.
ing joint venture, see Qualified Joint Ventures, later.
Rental real estate business. If you and your spouse make the
Married filing separately. If you and your spouse had com- election to be taxed as a QJV for your rental real estate busi-
munity income and file separate returns, attach Schedule SE to ness, the income generally isn’t subject to SE tax. To indicate
the return of each spouse with self-employment earnings under that election, be sure to check the “QJV” box in Part I, line 2,
the rules described earlier. Also, attach Schedule(s) C or F of each Schedule E that the rental property is listed on. Don’t
(showing the spouse's share of community income and expen- file Schedule SE unless you have other income subject to SE
ses) to the return of each spouse. tax. For an exception to this income not being subject to SE
Spouse who carried on the business. If you are the only tax, see item 3 under Other Income and Losses Included in Net
spouse who carried on the business, you must include on Earnings From Self-Employment, later.
Schedule SE, line 3, the net profit or (loss) reported on the oth- If you and your spouse make the election for a farm rental
er spouse's Schedule C or F (except in those cases described business that you report on Form 4835, Farm Rental Income
later under Income and Losses Not Included in Net Earnings and Expenses, each of you must file a separate Form 4835 to
From Self-Employment). Enter on the dotted line to the left of report your share of farm rental income based on crops or live-
Schedule SE, line 3, “Community income taxed to spouse” and stock produced by the tenant. Don’t file Schedule SE unless
the amount of any net profit or (loss) allocated to your spouse you have other income subject to the SE tax.
as community income. Combine that amount with the total of
lines 1a, 1b, and 2. Enter the result on line 3. Fiscal Year Filers
If your tax year is a fiscal year, use the tax rate and annual
Spouse who didn’t carry on the business. If you aren’t the
earnings limit that apply at the time the fiscal year begins.
spouse who carried on the business and you had no other in-
Don’t prorate the tax or annual earnings limit for a fiscal year
come subject to SE tax, enter “Exempt community income” on
that overlaps the date of a change in the tax or annual earnings
Schedule 2 (Form 1040), line 4. Don’t file Schedule SE.
limit.
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 al-
located to you as community income. On the dotted line to the Line Instructions
left of Schedule SE, line 3, enter “Exempt community income”
and the allocated amount. Figure the amount to enter on line 3 You will need to figure your net earnings from self-employ-
as follows. ment. To find out what is included as net earnings from
• If the allocated amount is a net profit, subtract it from the self-employment, see Net Earnings From Self-Employment, lat-
total of lines 1a, 1b, and 2. er.
• If the allocated amount is a loss, treat it as a positive Enter all negative amounts in (parentheses).
amount and add it to the total of lines 1a, 1b, and 2. TIP

Instructions for Part I

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You Have Only Church Employee Income earnings from self-employment from box 14, code A, of
Schedule K-1 (Form 1065). General partners should reduce this
Subject to SE Tax
amount by certain expenses before entering it on Schedule SE.
If your only income subject to SE tax is church employee in- See your Schedule K-1 instructions. If you reduce the amount
come (described earlier under Employees of Churches and you enter on Schedule SE, you must attach an explanation.
Church Organizations), skip lines 1 through 4b. Enter -0- on Limited partners should include only guaranteed payments for
line 4c and go to line 5a. services actually rendered to or on behalf of the partnership.
Note. Income from services you perform as a minister, mem- Whether a partner qualifies as a limited partner for purposes of
ber of a religious order, or Christian Science practitioner isn’t self-employment tax depends on whether the partner is consid-
church employee income. ered a limited partner under section 1402(a)(13).
Line 1b If a partner died and the partnership continued, include in
If you were receiving social security retirement or social secur- self-employment income the deceased's distributive share of
ity disability benefits at the time you received your Conserva- the partnership's ordinary income or loss through the end of the
tion Reserve Program (CRP) payment(s), enter the amount of month in which the partner died. See section 1402(f).
your taxable CRP payment(s) on line 1b. These payments are
If you were married and both you and your spouse were
included on Schedule F, line 4b, or listed in box 20, code AQ,
partners in a partnership, each of you must report your net
of Schedule K-1 (Form 1065).
earnings from self-employment from the partnership. Each of
Lines 4a Through 4c you must file a separate Schedule SE and report the partnership
If both lines 4a and 4c are less than $400 and you have an income or loss on Schedule E (Form 1040), Part II, for income
amount on line 1b, combine lines 1a and 2. tax purposes. If only one of you was a partner in a partnership,
• If the total of lines 1a and 2 is $434 or more, file Sched- the spouse who was the partner must report their net earnings
ule SE (completed through line 4c) with your tax return. En- from self-employment from the partnership.
ter -0- on Schedule 2 (Form 1040), line 4.* Community income. Your own distributive share of partner-
• If the total of lines 1a and 2 is less than $434, don’t file ship income is included in figuring your net earnings from
Schedule SE unless you choose to use an optional method to self-employment. Unlike the division of that income between
figure your SE tax. spouses for figuring income tax, no part of your share can be
* If you also have church employee income (described earlier included in figuring your spouse's net earnings from self-em-
under Employees of Churches and Church Organizations), also ployment.
complete lines 5a and 5b. Complete the rest of Schedule SE, as
Share Farming
appropriate.
You are considered self-employed if you produce crops or live-
Line 13 stock on someone else's land for a share of the crops or live-
If you are filing Form 1040-SS, skip this line. stock 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
Additional Medicare Tax
earnings for income tax purposes on Schedule F (Form 1040)
A 0.9% Additional Medicare Tax may apply to you if the total and for SE tax purposes on Schedule SE. See Pub. 225 for de-
amount on line 6 of all your Schedules SE exceeds one of the tails.
following threshold amounts (based on your filing status).
• Married filing jointly— $250,000 Other Income and Losses Included in Net
• Married filing separately— $125,000 Earnings From Self-Employment
• Single, Head of household, or Qualifying surviving
spouse— $200,000 1. Rental income from a farm if, as landlord, you material-
ly participated in the production or management of the produc-
If you have both wages and self-employment income, the tion of farm products on this land. This income is farm earn-
threshold amount for applying the Additional Medicare Tax on ings. To determine whether you materially participated in farm
the self-employment income is reduced (but not below zero) by management or production, don’t consider the activities of any
the amount of wages subject to Additional Medicare Tax. agent who acted for you. The material participation tests for
Use Form 8959, Additional Medicare Tax, to figure this tax. landlords are explained in Pub. 225.
For more information, see the Instructions for Form 8959, or 2. Cash or a payment-in-kind from the Department of Ag-
go to IRS.gov/ADMTfaqs. riculture for participating in a subsidy or conservation reserve
program.
Net Earnings From Self-Employment 3. Payments for the use of rooms or other space when you
In most cases, net earnings include your net profit from a farm also provided substantial services for the convenience of your
or nonfarm business. tenants. Examples are hotel rooms, boarding houses, tourist
camps or homes, trailer parks, parking lots, warehouses, and
Partnership Income or Loss storage garages. See Pub. 334 for more information.
If you were a general or limited partner in a partnership, in- 4. Income from the retail sale of newspapers and maga-
clude on line 1a or line 2, whichever applies, the amount of net zines if you were age 18 or older and kept the profits.

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5. Income you receive as a direct seller. Newspaper carriers that amount from the total of lines 1a, 1b, and 2, and enter the
or distributors of any age are direct sellers if certain conditions result on line 3.
apply. See Pub. 334 for details. 3. Income you received as a retired partner under a written
6. Amounts received by current or former self-employed partnership plan that provides for lifelong periodic retirement
insurance agents and salespersons that are: payments if you had no other interest in the partnership and
a. Paid after retirement but figured as a percentage of com- didn’t perform services for it during the year.
missions received from the paying company before retirement, 4. Income from real estate rentals if you didn’t receive the
b. Renewal commissions, or income in the course of a trade or business as a real estate deal-
er. Report this income on Schedule E.
c. Deferred commissions paid after retirement for sales
made before retirement. 5. Income from farm rentals (including rentals paid in crop
shares) if, as landlord, you didn’t materially participate in the
However, certain termination payments received by former
production or management of the production of farm products
insurance salespersons aren’t included in net earnings from
on the land. See Pub. 225 for details. Report this income on
self-employment (as explained in item 10 under Income and
Form 4835. Use two Forms 4835 if you and your spouse made
Losses Not Included in Net Earnings From Self-Employment,
an election to be taxed as a QJV.
later).
6. Payments you receive from the CRP if you are receiving
7. Income of certain crew members of fishing vessels with
social security benefits for retirement or disability. Deduct
crews of normally fewer than 10 people. See Pub. 334 for de-
these payments on line 1b of Schedule SE.
tails.
7. Dividends on shares of stock and interest on bonds,
8. Fees as a state or local government employee if you
notes, or other evidence of indebtedness issued with interest
were paid only on a fee basis and the job wasn’t covered under
coupons or in registered form by any corporation (including
a federal-state social security coverage agreement.
those issued by a government or its political subdivision), if
9. Interest received in the course of any trade or business, you didn’t receive the income in the course of your trade or
such as interest on notes or accounts receivable. business as a dealer in stocks or securities.
10. Fees and other payments received by you for services as 8. Gain or loss from:
a director of a corporation.
a. The sale or exchange of a capital asset;
11. Recapture amounts under sections 179 and 280F that
b. The sale, exchange, involuntary conversion, or other dis-
you included in gross income because the business use of the
position of property unless the property is stock in trade or oth-
property dropped to 50% or less. Don’t include amounts you
er property that would be includible in inventory, or held pri-
recaptured on the disposition of property. See Form 4797.
marily for sale to customers in the ordinary course of the busi-
12. Generally, fees you received as a professional fiduciary. ness; or
This may also apply to fees paid to you as a nonprofessional
c. Certain transactions in timber, coal, or domestic iron
fiduciary if the fees relate to active participation in the opera-
ore.
tion of the estate's business, or the management of an estate
that required extensive management activities over a long peri- 9. Net operating losses from other years.
od of time. 10. Termination payments you received as a former insur-
13. Gain or loss from section 1256 contracts or related prop- ance salesperson if all of the following conditions are met.
erty by an options or commodities dealer in the normal course a. The payment was received from an insurance company
of dealing in or trading section 1256 contracts. because of services you performed as an insurance salesperson
for the company.
Income and Losses Not Included in Net
b. The payment was received after termination of your
Earnings From Self-Employment agreement to perform services for the company.
1. Salaries, fees, and other income subject to social securi- c. You didn’t perform any services for the company after
ty or Medicare tax that you received for performing services as termination and before the end of the year in which you re-
an employee, including services performed as an employee un- ceived the payment.
der the railroad retirement system. This includes services per- d. You entered into a covenant not to compete against the
formed as a public official (except as a fee-basis government company for at least a 1-year period beginning on the date of
employee as explained in item 8 under Other Income and Los- termination.
ses Included in Net Earnings From Self-Employment, earlier).
e. The amount of the payment depended primarily on poli-
2. Fees received for services performed as a notary public. cies sold by or credited to your account during the last year of
If you had no other income subject to SE tax, enter “Ex- the agreement, or the extent to which those policies remain in
empt—Notary” on Schedule 2 (Form 1040), line 4. Don’t file force for some period after termination, or both.
Schedule SE. However, if you had other earnings of $400 or
more subject to SE tax, enter “Exempt—Notary” and the f. The amount of the payment didn’t depend to any extent
amount of your net profit as a notary public from Schedule C on length of service or overall earnings from services per-
on the dotted line to the left of Schedule SE, line 3. Subtract formed for the company (regardless of whether eligibility for
the payment depended on length of service).

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Statutory Employee Income There is no limit on how many years you can use this meth-
od.
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 Under this method, report in Part II, line 15, two-thirds of
sure to include on line 8a statutory employee social security your gross farm income, up to $6,920, as your net earnings.
wages and tips from Form W-2. This method can increase or decrease your net earnings from
farm self-employment even if the farming business had a loss.
Instructions for Part II For a farm partnership, figure your share of gross income
based on the partnership agreement. With guaranteed pay-
Optional Methods ments, 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 partner-
How the Optional Methods Can Help You
ship. If you were a limited partner, include only guaranteed
Social security coverage. The optional methods may give you payments for services you actually rendered to or on behalf of
credit toward your social security coverage even though you the partnership. Whether a partner qualifies as a limited partner
have a loss or a small amount of income from self-employ- for purposes of self-employment tax depends on whether the
ment. partner is considered a limited partner under section 1402(a)
Credits affected by earned income. Using the optional meth- (13).
ods may qualify you to claim the earned income credit (EIC),
additional child tax credit (ACTC), or child and dependent care Nonfarm Optional Method
credit or give you a larger credit if your net earnings from You may be able to use this method to figure your net earnings
self-employment (determined without using the optional meth- from nonfarm self-employment if your net nonfarm profits
ods) are less than $6,920. Figure the EIC, ACTC, and child and were less than $7,493 and also less than 72.189% of your gross
dependent care credit with and without using the optional nonfarm income. Net nonfarm profits are the total of the
methods to see if the optional methods will benefit you. amounts from:
Self-employed health insurance deduction. The optional • Schedule C (Form 1040), line 31; and
methods of computing net earnings from self-employment may • Box 14, code A, of Schedule K-1 (Form 1065) (from oth-
be used to figure your self-employed health insurance deduc- er than farm partnerships).
tion. See Form 7206 and its instructions to determine if your To use this method, you must also be regularly self-em-
self-employed health insurance deduction is limited. ployed. You meet this requirement if your actual net earnings
Other items affected by adjusted gross income (AGI). Us- from self-employment were $400 or more in 2 of the 3 consec-
ing the optional methods may decrease your AGI, which may utive taxable years immediately preceding the year you use the
affect your eligibility for credits, deductions, or other items that nonfarm optional method. The net earnings of $400 or more
are subject to an AGI limit. Figure your AGI with and without could be from either farm or nonfarm earnings, or both. The
using the optional methods to see if the optional methods will net earnings include your distributive share of partnership in-
benefit you. come or loss subject to SE tax.
Using the optional methods as described above may You can use the nonfarm optional method to figure your
earnings from self-employment for only 5 years. The 5 years
! be beneficial, but they may also increase your SE tax. don’t have to be consecutive.
CAUTION
Under this method, report in Part II, line 17, two-thirds of
Changing Your Method 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
You can change the method used to figure your net earnings earnings from nonfarm self-employment.
from self-employment after you file your return. That is, you
can change from the regular to the optional method or from the Figure your share of gross income from a nonfarm partner-
optional to the regular method. To do this, file Form 1040-X. ship in the same manner as a farm partnership. See Farm Op-
tional Method, earlier, for details.
Farm Optional Method
Using Both Optional Methods
You may use this method to figure your net earnings from farm
self-employment if your gross farm income was $10,380 or If you can use both methods, you can report less than your total
less or your net farm profits were less than $7,493. Net farm actual net earnings from farm and nonfarm self-employment,
profits are: but you can’t report less than your actual net earnings from
• The total of the amounts from Schedule F (Form 1040), nonfarm self-employment alone.
line 34, and box 14, code A, of Schedule K-1 (Form 1065), mi- If you use both methods to figure net earnings, you can’t re-
nus port more than $6,920 of net earnings from self-employment.
• The amount you would have entered on Schedule SE,
line 1b, had you not used the optional method.

SE-6

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