This is an option for tax year 2020 that allows self-employed taxpayers to postpone the payment of 50% of the Social Security portion of their self-employment tax for net business income earned from March 27, 2020 through December 31, 2020.
Taxpayers have to make their calculation of Line 18, but the IRS gives you a lot of leeway in figuring the amount. I include an example below.
On Line 18, you're asked to make a calculation of the portion of the net profit or loss that you reported on Line 3 of Schedule SE that was made between March 27, 2020 and December 31, 2020.
The instructions for Line 18 in the IRS's 2020 Instructions for Schedule SE are vague, but they allow you to use any reasonable method to determine this figure:
Use any reasonable method to divide the net profit or (loss) you reported on line 3 between (a) January 1, 2020, through March 26, 2020, and (b) March 27, 2020, through December 31, 2020. A reasonable method will accurately reflect the time when income was earned or accrued and deductible expenses were paid or incurred, depending on your method of accounting. In most cases, a proportional division of the amount reported on line 3 based upon the number of days in each period will be considered reasonable.
EXAMPLE: Say your Schedule SE Line 3 amount was $12,000. March 27 to December 31 is 280 days. 280 days divided by 366 days (2020 was a leap year) is 0.765. $12,000 multiplied by 0.765 equals $9,180.