Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Self-Employment Tax Form 1040-SS

Self-Employment Tax

Methods for Computing Self-Employment Tax (continued)

Regular Method Step 1: Determine Net Profit (continued)

After identifying the correct items of business income and deductions to include, use this formula to calculate the net profit:

Gross profit — Total allowable expenses = Net profit

The equation for calculating Alyssa's net profit is: $77,200 - $11,500 = $65,700

Small corner grocery store.