Using the Optional Method for Self-Employment Tax

Some small businesses and farmers who otherwise would have annual income too small to qualify for all four credits towards Social Security benefits can use an optional method to calculate their self-employment (SECA) tax. By using this method they will pay more SECA tax this year, but may qualify for more Social Security benefits in the future.

To see whether you qualify for an optional method, take a look at the following flow chart:

optional methods flow chart

This file is in .tif graphics format. You may read it in your Internet browser, or print it out if you wish.

For more information, see our discussion of computing your SECA tax.