Methods for Computing Self-Employment Tax (continued)

Nonfarm Optional Method Tests

All of these tests must be met to use the nonfarm optional method:

• Net nonfarm profits must be less than both:
  • $7,493, and
  • 72.189% of gross nonfarm income
• Net earnings from self-employment are $400 or more in at least two of the three years before the year this method is used
• Taxpayer has used the nonfarm optional method less than five years; the lifetime limit for a taxpayer is five years