Instructions For Form 1040-Ss Page 10
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13Farm Optional Method
partnerships showing your distributive
as a farm partnership. For details, see
share.
Farm Optional
Method, earlier.
You may use this method to figure your
Lines 4a Through 4c
Using Both Optional Methods
net earnings from farm self-employment if
your gross farm income was $7,560 or
If both lines 4a and 4c are less than $400
If you can use both optional methods, you
less, or your net farm profits were less
and you have deducted CRP payments on
can report less than your total actual net
than $5,457. Net farm profits are the total
line 1b, combine lines 1a and 2.
earnings from farm and nonfarm
of the amounts from Part III, line 36, and
If the total of lines 1a and 2 is $434 or
self-employment, but you can't report less
your distributive share from farm
more, complete Part V through line 4c.
than your actual net earnings from
partnerships, minus the amount you would
Enter “-0-” in Part I, line 3, unless you also
nonfarm self-employment alone.
have entered in Part V, line 1b, had you
have church employee income. If you also
not used the optional method.
If you use both methods to figure net
have church employee income, see
earnings from self-employment, you can't
Church
Employees, earlier. Also complete
There is no limit on how many years
report more than $5,040 of net earnings
lines 5a and 5b and the rest of Part V, as
you can use this method.
from self-employment.
appropriate.
Under this method, report in Part VI,
If the total of lines 1a and 2 is less than
Completing Your Return
line 2, the smaller of: two-thirds of your
$434, do not complete Part V unless you
gross farm income (not less than zero), or
choose to use an optional method to figure
Third Party Designee
$5,040. This method can increase or
your SE tax or you have church employee
decrease your net self-employment farm
If you want to allow your preparer, a friend,
income. If you have church employee
earnings. You can use this method even if
family member, or any other person you
income see
Church
Employees, earlier.
your farming business had a loss.
choose to discuss your 2016 tax return
Also complete lines 5a and 5b and the rest
with the IRS, check the “Yes” box in the
of Part V, as appropriate.
For a farm partnership, figure your
“Third Party Designee” area on page 1 of
share of gross income based on the
Line 8b
your return. Also, enter the designee's
partnership agreement. With guaranteed
name, phone number, and any five digits
If you received tips of $20 or more in any
payments, your share of the partnership's
the designee chooses as his or her
month and did not report the full amount to
gross income is your guaranteed
personal identification number (PIN).
your employer, you must file Form 4137
payments plus your share of the gross
with Form 1040-SS (see instructions for
income after it is reduced by all
If you check the “Yes” box, you (and
Part I,
Line
5, earlier). Disregard the
guaranteed payments made by the
your spouse if filing a joint return) are
references to Form 1040 shown on Form
partnership. If you were a limited partner,
authorizing the IRS to call the designee to
4137. Enter on line 8b the amount from
include only guaranteed payments for
answer any questions that may arise
Form 4137, line 10.
services you actually rendered to or on
during the processing of your return. You
behalf of the partnership.
Line 8c
are also authorizing the designee to:
Give the IRS any information that is
Nonfarm Optional Method
If you are an employee who received
missing from your return,
wages from an employer who did not
You may be able to use this method to
Call the IRS for information about the
withhold social security and Medicare tax,
figure your net earnings from nonfarm
processing of your return or the status of
you must file Form 8919 with Form
self-employment if your net nonfarm
your refund or payment(s),
1040-SS (see instructions for Part I,
profits were less than $5,457, and also
Receive copies of notices or transcripts
Line
5, earlier). Enter on line 8c the
less than 72.189% of your gross nonfarm
related to your return, upon request, and
amount from Form 8919, line 10.
income. Net nonfarm profits are the total
Respond to certain IRS notices about
of the amounts from Part IV, line 27, and
math errors, offsets, and return
Part VI—Optional Methods
your distributive share from other than
preparation.
To Figure Net Earnings
farm partnerships.
You aren't authorizing the designee to
The optional methods may give you credit
To use this method, you also must be
receive any refund check, bind you to
toward your social security coverage even
regularly self-employed. You meet this
anything (including any additional tax
though you have a loss or a small amount
requirement if your actual net earnings
liability), or otherwise represent you before
of income from self-employment. But the
from self-employment were $400 or more
the IRS. If you want to expand the
optional methods may require you to pay
in 2 of the 3 years preceding the year you
designee's authorization, see Pub. 947.
SE tax when you would otherwise not be
use the nonfarm optional method. The net
required to pay.
earnings of $400 or more could be from
The authorization will automatically end
either farm or nonfarm earnings or both.
no later than the due date (without regard
If you are filing a joint return and both
The net earnings include your distributive
to extensions) for filing your 2017 tax
you and your spouse choose to use an
share of partnership income or loss
return. This is April 17, 2018, for most
optional method to figure net earnings
subject to SE tax.
people. If you wish to revoke the
from self-employment, you must each
authorization before it ends, see Pub. 947.
complete and attach a separate Part VI.
Use of the nonfarm optional method
Signature and Date
from nonfarm self-employment is limited to
You can change the method after you
5 years. The 5 years do not have to be
file your return. That is, you can change
Sign and date your return. It isn't valid
consecutive.
from the regular to the optional method or
unless you sign it. If you are filing a joint
from the optional to the regular method.
return, your spouse must also sign. If your
Under this method, report in Part VI,
To do this, file a new Form 1040-SS. See
spouse can't sign the return, see Pub.
line 4, the smaller of: two-thirds of your
the instructions under
Amended
Returns,
501.
gross nonfarm income (not less than
later.
zero), or the amount in Part VI, line 3. But
Generally, anyone you pay to prepare
you can't report less than your actual net
Using the optional methods may
your return must sign it and fill in the Paid
earnings from nonfarm self-employment.
qualify bona fide residents of
TIP
Preparer Use Only area in the space
Puerto Rico to claim the additional
Figure your share of gross income from
provided. The preparer must give you a
child tax credit or give them a larger credit.
a nonfarm partnership in the same manner
copy of the return for your records.
Instructions for Form 1040-SS (2016)
SS-10
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