§412 Self-employment Income Credited to Calendar Years

Summary

Count self-employment income when figuring average indexed monthly earnings, average monthly wage, and quarters of coverage. For tax years that begin before 1978: if the tax year is the calendar year, spread the income evenly across that year’s four calendar quarters. If the tax year is not the calendar year, spread the income evenly to the calendar quarter in which the tax year ends and to each of the up to three preceding calendar quarters that the tax year covers. For tax years that begin after 1977 (unless subsection (c) applies): if the tax year is the calendar year or both starts and ends within the same calendar year, assign the income to that calendar year. If the tax year spans two calendar years, split the income between those two years based on how many months in each calendar year are completely inside the tax year; the month the tax year ends counts as completely inside. If an individual elects the option referenced in the law, allocate the income between the two calendar years using the ratio of the totals under section 413(d) for the calendar quarters ending with or within each year to the lower limit in section 411(k)(1).