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Schedule SE Lines 1 to 4: Net Earnings (2025 Return)

Updated October 18, 2026. Quick answer: Lines 1 to 4 of Schedule SE build your net earnings from self-employment. A sole proprietor usually puts the profit from Schedule C line 31 on line 2, line 3 combines the entries, line 4a multiplies a profit by 92.35%, and line 4c is the test for whether any self-employment tax is owed. The numbers come from your Schedule C, Schedule F or Schedule K-1.

IRS worksheets read line by line: Schedule 8812 Earned Income Worksheet.

Related reading on this site: IRS Publication 334.

Form lines read one part at a time: Form 8959 Part II.

IRS worksheets read line by line: EIC Worksheet B.

What lines 1 to 4 ask for

These are the first lines of the form introduced on the Schedule SE (Form 1040) page. Line 1a is “Net farm profit or (loss) from Schedule F, line 34, and farm partnerships, Schedule K-1 (Form 1065), box 14, code A”. Line 2 is “Net profit or (loss) from Schedule C, line 31;” and the box 14 amount for partnerships other than farming. Line 3 says “Combine lines 1a, 1b, and 2”. The instructions add a formatting rule: “Enter all negative amounts in (parentheses).”

Where the line 2 number comes from

For most readers this is the Schedule C profit. The Schedule C form tells you where line 31 goes: “If a profit, enter on both Schedule 1 (Form 1040), line 3, and on Schedule SE, line 2.” The line itself is covered on the Schedule C lines 31 and 32 page, and the form as a whole on the Schedule C (Form 1040) page.

The instructions give a general description of what counts: “In most cases, net earnings include your net profit from a farm or nonfarm business.” If you had several businesses, “If you had a loss in one business, it reduces the income from another.” Partners work differently: “include on line 1a or line 2, whichever applies, the amount of net earnings from” self-employment “from box 14, code A, of Schedule K-1 (Form 1065).” The Schedule K-1 box 14 page explains that box.

What is included and what is left out

The instructions list items that are part of net earnings, for example “Interest received in the course of any trade or business, such as interest on notes or accounts receivable.” and “Fees and other payments received by you for services as a director of a corporation.” They also list items that are not, including “Fees received for services performed as a notary public.” and “Net operating losses from other years.”

One exclusion matters to many Schedule C filers. For a statutory employee, “don’t include the net profit or (loss) from Schedule C, line 31, on Schedule SE, line 2.” The lists in the instructions are longer than the few items shown here, so check the full lists for your situation.

Lines 1b and 3

Line 1b applies only to people who were receiving social security benefits. The instructions say “If you were receiving social security retirement or social security disability benefits at the time you received your Conservation Reserve Program (CRP) payment(s), enter the amount of your taxable CRP payment(s) on line 1b.” Line 3 then combines lines 1a, 1b and 2 into one figure.

Line 4a: the 92.35% step

Line 4a reads “If line 3 is more than zero, multiply line 3 by 92.35% (0.9235). Otherwise, enter amount from line 3”. Here is a labelled illustration of the form’s own arithmetic, not an IRS example. Suppose line 3 were $50,000. Line 4a would be $50,000 multiplied by 0.9235, which is $46,175. Suppose instead line 3 were a loss of $2,000. Because line 3 is not more than zero, the form says to enter the amount from line 3, so line 4a would show the same $2,000 loss.

Lines 4b and 4c: the $400 test

Line 4b is for the optional methods: “If you elect one or both of the optional methods, enter the total of lines 15 and 17 here”. Line 4c then says “Combine lines 4a and 4b. If less than $400, stop; you don’t owe” self-employment tax, with one exception: if the total is less than $400 and you had church employee income, you enter zero and continue. In the first illustration above, line 4a is $46,175 and line 4b is zero, so line 4c is $46,175 and the stop instruction does not apply.

The instructions add a rule for one special case: “If both lines 4a and 4c are less than $400 and you have an amount on line 1b, combine lines 1a and 2.” Then “If the total of lines 1a and 2 is $434 or more, file Schedule SE (completed through line 4c) with your tax return.” Also, “If the total of lines 1a and 2 is less than $434, don’t file Schedule SE unless you choose to use an optional method to figure your SE tax.”

Where it goes next

Line 4c carries to line 6, which the form words as “Add lines 4c and 5b”. The rest of the calculation, including the social security base and the two tax rates, is on the Schedule SE lines 5 to 13 page. The overview of the whole form is on the Schedule SE (Form 1040) page, and the tax ends up on Schedule 2 line 4 and Form 1040.

Edition and line numbers

This page reads the 2025 Schedule SE (Form 1040) and its 2025 instructions, the current files irs.gov served on 2026-10-18 (byte-identical to the archived copies). They are the files for the tax year 2025 return, filed in 2026. The schedule says “Attach to Form 1040, 1040-SR, 1040-SS, or 1040-NR.” Check the tax year printed on the schedule you are filling in and use the line numbers on that year’s schedule, because a different year’s schedule can number or word its lines differently.

Common mistakes

  • Putting a statutory employee’s Schedule C profit on line 2. The instructions say “don’t include the net profit or (loss) from Schedule C, line 31, on Schedule SE, line 2.”
  • Carrying line 3 straight to the next step. When line 3 is positive, line 4a says “multiply line 3 by 92.35% (0.9235)”.
  • Running a second business on a separate schedule. The instructions say “Figure the combined SE tax on one Schedule SE.”

Related: Schedule C (Form 1040), Schedule K-1 box 14, Schedule 2 line 4, self-employment tax explained, and Form 1040.

Sources

Read from the IRS documents linked above on October 18, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.

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