Calculating Your Net Earnings From Self-Employment
If you are self-employed, you will need to report your net earnings to Social Security and the Internal Revenue Service (IRS). Net earnings for Social Security are your gross earnings from your trade or business, minus all of your allowable business deductions and depreciation.
In figuring your net earnings for Social Security, don’t include the following:
- Dividends from shares of stock and interest on bonds, unless you receive them as a dealer in stocks and securities.
- Interest from loans, unless your business is lending money.
- Rentals from real estate, unless you are a real estate dealer or regularly provide services mostly for the convenience of the occupant.
- Income received from a limited partnership.
How To Report Your Earnings
You must complete the following federal tax forms by April 15 following any year in which you have net earnings of $400 or more:
- Form 1040 (U.S. Individual Income Tax Return).
- Schedule C (Profit or Loss from Business) or Schedule F (Profit or Loss from Farming) as appropriate.
- Schedule SE (Self-Employment Tax).
You can download these forms from the IRS Forms, Instructions & Publications website.
Even if you don't owe any income tax, you must complete Form 1040 and Schedule SE to pay self-employment Social Security tax. This is true even if you already get Social Security benefits.