Optional Method

If your actual net earnings are less than $400, your earnings can still count for Social Security under an optional method of reporting. The optional method can be used if your gross earnings are $600 or more or when your profit is less than $1,600.

You can use the optional method no more than five times. Your actual net must have been $400 or more in at least two of the last three years, and your net earnings must be less than two-thirds of your gross income.

Here's how it works:

if your gross income from self-employment is between $600 and $2,400, you may report two-thirds of your gross or your actual net earnings if $400 or more; or

if your gross income is $2,400 or more and the actual net earnings are $1,600 or less, you report either $1,600 or your actual net.

Special Note For Farmers: If you're a farmer, you can use the optional reporting method every year. It's not necessary to have had actual net earnings of at least $400 in a preceding year. We suggest you call Social Security and ask for the booklet, A Guide for Farmers, Growers and Crew Leaders (Publication No. 05-10025).