Social Security And Self Employed

When you are self-employed

Most people who pay into Social
Security work for an employer who
deducts Social Security taxes from their paycheck, matches that contribution, sends taxes to the Internal Revenue Service (IRS), and reports wages to Social Security.

However, self-employed people must
report their earnings and pay their Social Security taxes directly to the IRS. These taxes will help determine eligibility for benefits later.

One is self-employed if he or she operates a trade, business, or profession,
either by themselves or with a partner. They report earnings for Social Security
purposes when filing a federal income tax return. If net earnings are $400 or
more in a year, earnings must be reported on Schedule SE.

Net earnings for Social Security are gross earnings from a trade or business,
minus allowable business deductions and depreciation. Some income doesn’t
count for Social Security and shouldn’t be included in figuring net earnings.

Read more about self-employment, paying Social Security taxes and
reporting net earnings at www.socialsecurity.gov/pubs/EN-05-10022.pdf.

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