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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 (if you need help accessing your self-employment tax, go to our Self Employment Tax FAQ):

  1. From within your self-employment tax, continue with the interview process until you reach the screen titled Schedule SE - SE Tax, and click Optional Method.
  2. Continue with the interview process to enter your information (if your refund amount decreases, you can repeat these steps to uncheck any boxes).

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


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