Annette, please see Publication 17:
- Self-employed individuals. If you are self-employed, your gross income includes the amount on line 7 of Schedule C (Form 1040), Profit or Loss From Business; and line 9 of Schedule F (Form 1040), Profit or Loss From Farming. See Self-Employed Persons, later, for more information about your filing requirements.
- You must file a return if your gross income is at least as much as the filing requirement amount for your filing status and age (shown in Table 1-1).
My understanding is that a return is required in this situation, despite net earnings being less than the $400 self-employment tax threshold, because gross self-employment income (before expenses) is used to determine if the gross income filing threshold is met.
