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If you realize a net business loss on Schedule C (Form 1040) Profit or Loss From Business, you are not required to file Schedule SE (Form 1040) Self-Employment Tax or pay self-employment taxes. However, the IRS does provide an optional self-employment tax calculation method which may give you credit toward Social Security without increasing your taxes.

To test whether the Optional Method benefits you in TaxAct®:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Business Income in the Federal Quick Q&A Topics menu to expand, then click Taxpayer's/Spouse's self-employment tax.
  3. Continue with the interview process to enter all of the appropriate information.
  4. On the screen titled Schedule SE - SE Tax, click Optional Method.
  5. On the screen titled Schedule SE - Nonfarm Optional Method, check Use the Nonfarm Optional Method, then click Continue.

Note. If your refund amount decreases, you can repeat these steps to uncheck/clear this box.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.


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