Count the following amounts when determining NESE for ET purposes:
All Self-Employment Income (SEI)
See RS 01804.000 ff. for the definition of SEI; also, its relationship to NESE, and the TY minimum
and maximum totals.
Round SEI to the next lowest dollar when applying deductions under the ET.
Count all NESE, including amounts above the maximum limitation for SE Tax and amounts
under $400. See RS 01801.001 ff.
For tax years after 1989, a tax credit of 7.65 percent is deducted from the actual
net profit to determine NESE. A multiplier of .9235 is applied to the net profit to
determine NESE. The multiplier applies to NESE above the SECA maximum. However, the
deduction is not applied to net profit when the resulting amount is less than $400.
In this case the actual new profit is the earnings for deduction purposes.
Count any NESE of an individual granted an exemption from SE tax by the Internal Revenue
Service. These are earnings from a noncovered trade or business. In these cases, the
new profit is the earnings for deduction purposes without application of the SE tax
credit multiplier. See RS 01802.064 and RS 01802.270. When the optional method of computing and reporting farm or non-farm NESE is used,
the amount so reported is the amount used for ET purposes. See RS 01803.160 and RS 01803.180.