Self-Employment and Social Security

" "Many people enjoy the independence of owning and operating their own small business. If you’re a small business owner, you know that you have additional financial responsibilities when reporting your taxes. A part of this is paying into Social Security. 

Most people who pay into Social Security work for an employer. Their employer deducts Social Security taxes from their paycheck, adds a matching contribution, then sends those taxes to the Internal Revenue Service (IRS) and reports the wages to Social Security. Self-employed people must do all these actions and pay their taxes directly to the IRS.

You’re self-employed if you operate a trade, business or profession, either by yourself or as a partner. You report your earnings for Social Security when you file your federal income tax return. If your net earnings are $400 or more in a year, you must report your earnings on Schedule SE, in addition to the other tax forms you must file.

You must have worked and paid Social Security taxes for a certain length of time to get Social Security benefits. The amount of time you need to work depends on your date of birth, but no one needs more than 10 years of work (40 credits).

In 2019, if your net earnings are $5,440 or more, you earn the yearly maximum of four credits — one credit for each $1,360 of earnings during the year. If your net earnings are less than $5,440, you still may earn credit by using an optional method described below.

We use all your earnings covered by Social Security to figure your Social Security benefit, so, report all earnings up to the maximum, as required by law.

Family members may operate a business together. For example, a husband and a wife may be partners or run a joint venture. If you operate a business together as partners, you should each report your share of the business profits as net earnings on separate self-employment returns (Schedule SE), even if you file a joint income tax return. The partners must decide the amount of net earnings each should report (for example 50 percent and 50 percent).

You can read more about being self-employed and how that affects your Social Security benefits including optional methods of reporting.


49 thoughts on “Self-Employment and Social Security

  1. I am 65 years a good ideas to be self employed.but i am no income or fanancial to good for anyone who elderly disable no chances !

  2. I was on SS Disability and turned 66 years of age on 7/17/2019. I got a letter saying that it is now retirement benefits. Do I have to file taxes in April for the retirements received for 1/2 of 2019? My husband is unemployed and my caretaker as we could not afford one. So there is no actual earned income between us but I want to make sure that we file if we are suppose to.
    Kathy McKenna

  3. I believe that I am involved in some kind of corporation and believe large amount is on I find out what is going on with irs

  4. Thank for this comment section and your willingness to answer back. – (Kenny O., Public Affairs Specialist)

    You all have a good day!

  5. My ages claim is pending from social security, if I’m wen i will start a to sale something’s to be serlf employed ! Because i am 65 years old elderly disable !

  6. The SSA should force those claimants waiting on an ALJ hearing to participate in the State’s vocational rehabilitation program while they wait.

    Vocational rehabilitation is mandatory unlike Ticket-To-Work. Since the claimants are not receiving SSDI/SSI benefits, the SSA doesn’t have to pay the State’s rehabilitation services anything.

    The SSA can reduce the claimant’s payment for every month they don’t participate.

    The ADA law requires all employers to accommodate a qualified disabled person. They can sign up for jobs with the State’s Vocational Services even if the job is not available to them now. This is why we have the ADA employment discrimination laws.

  7. I have tried everything that I’ve tried to remember but it’s not enough time or it’s not working because I live with my parents and everything that I have done here is a lot but everything that I’ve tried to remember for me is hard and my doctor has sent you things that say that I am disability and my medical Records are @ St. Marys Hospital & Cabell Huntington Hospital & I am so handicapped I cannot remember how much I have to do to try to get help with my social security disability benefits! And I deserve everything that I am entitled To as a USA citizen! But I don’t say anything right & now because I cannot remember everything that I needed to remember you have told me that I am unable to receive my disability benefits and I cannot believe that I have tried everything that I know or can remember & it didn’t matter but it’s not fair to cut me off and not send me my disability benefits because I have paid for everything & I don’t have any more money or time to keep this up ! I need to know what I need to have to get my social security disability benefits because I am physically and mentally handicapped and being so abused by everyone that I was married to & everyone else who doesn’t like me! And I am sorry for saying everything that I am saying but it’s ridiculous to keep saying or doing this every single day! And I am about to just call the i inspector general of the Social Security administration and ask him or her what to do because you all aren’t getting anything done but analyzing I haven’t worked in over 10 years or less and that’s not right after working 30 years and or 40 years and paying into this and not being able to receive anything is unimaginable and I need help and I am going to call them on Monday so whatever you can do Would be appreciated !

  8. The State DDS are not following SSA regulations. They are using SSA-4734-F4-SUP form to assess Creteria B of the Mental Disorder Listings 12.00.

    The Criteria B is used to see if they meet the medical listing, while SSA-4734-F4-SUP form is used for the assessment of the RFC to see if they have a substantial loss in mental demand of unskilled work.

    There should be a form for the four areas of Criteria B of the Mental Disorder Listing . It should list the activities under each of the four sections like the RFC form(SSA-4734-F4-SUP). Then the MC/PC has to rate it none, mild, moderate, marked, or extreme.

    The State DDS need to perform this assessment form required by SSA regulations. It should be in their case file, so the claimant or their representative can dispute the findings of fact. The ALJ can’t use care for pets, watch TV, go to church, etc to deny the claimant at step 5. These activities are to deny them at Step 3.

  9. The State DDS uses the expedited Step 5 denial process to deny self employed people their disability benefits. The expedited Step 5 can only be done after Step 3. The DDS must fully develope the medical records at Step 3.

    The State DDS motto is quantity and not quality. This is why they have a problems with the CE exams in Tennessee.

    Make findings of fact; do not merely summarize evidence. POMS DI 26515.001

  10. When you work as an employee for someone else, that organization or company take care of Social Security, but if you are self-employed then the process is a bit different

    One of the cool benefits of Self-employed is – you claim your all deductions on Schedule C, which can make your taxable income substantially lower.

    Thanks for writing this Post

  11. I recently opened my own grooming business on January 1st of this year 2019. I realized that I would need to get a social security set up. How do I go about having this done.

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  13. I will turn 70 this January and am self employed. Next year will I still need to pay into Social Security on the money I make in 2020?

    • Hi, Nevia. If you work and are full retirement age or older, you may keep all of your benefits, no matter how much you earn, starting with the month you reach your full retirement age. However, if you are younger than full retirement age and make more than the yearly earnings limit, this can reduce the number of payments you receive through the year. For 2019, that limit is $17,640. If you applied and received benefits prior to attainment of full retirement age, and work part-time thereafter you will be considered “retired” only if your monthly earnings are $1,470 or less. Also, if your earnings will be over the limit for the year but you will be retired for part of the year, we have a special rule that applies to earnings for one year. Please visit our Retirement Planner: Getting Benefits While Working for more information. If you have specific questions about your situation, please call our toll-free number at 1-800-772-1213 and speak with one of our agents. Representatives are available Monday through Friday, between 7:00 a.m. and 7:00 p.m. We hope this helps.

  14. I took early retirement at 62 and began receiving benefits. But, this year I stopped my benefits because I thought I would earn too much money, therefore receiving zero through October 2019
    Now, I have calculated that I will have Sch. C income of $40,000. Does Social Security adjust my self-employment income by 1/2 of the self-employment tax (about $3,000) to arrive at my net self-employment income for determining social security benefits?

    • Hi JA. For your security, we do not have access to your personal information in this forum. Your question is a good question, but a bit too complicated for this forum. For specific questions about your account, please call our toll free number, 1-800-772-1213 (TTY 1-800-325-0778), from Monday through Friday, between 7:00 a.m. and 7:00 p.m. You may also contact your local Social Security office. We also ask members of this forum not to post personal information, as this venue is a public domain and therefore not secured. We hope this helps.

  15. I do alterations for a school choir, and occasionally do costumes foe a little cal theater. I don’t consider myself as self employed. How does this affect my social security?

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  17. My Social security account was suspended due to new phone being purchased in August. I tried and tried to get it to work, who can help with this. My contact number is (904) 908-7018. Thank you for your help, so I can access my account again. Sincerely, Stephen J. Harrington
    DOB: 6/30/56.

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