Methods for Computing Self-Employment Tax (continued)

Nonfarm Optional Method

The nonfarm optional method is usually used by taxpayers who need additional quarters of credit to get Social Security benefits.

Using this method, taxpayers can continue coverage for self-employment tax when their net profit is small or they have a loss. Taxpayers may not use this method to report:

• Amounts less than $400
• Amounts less than the actual net earnings from self-employment