Calculating net earnings for Social Security if you are self-employed
Most people who pay into Social Security work for an employer. Their employer 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 your eligibility for benefits later.
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 purposes 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.
Net earnings for Social Security are your gross earnings from your trade or business, minus your allowable business deductions and depreciation. Some income doesn’t count for Social Security and shouldn’t be included in figuring your net earnings.
You can read more about self-employment, paying your Social Security taxes and figuring and reporting your net earnings at www.socialsecurity.gov/pubs/ EN-05-10022.pdf.
Social Security has been a cornerstone of American security for over 80 years. As a self-employed person, your small business is another cornerstone in the foundation of our economy. Working together, we make this nation stronger.
Applying online is the fastest way to get Social Security benefits. Here are some of the types of benefits you can apply for:
■ Retirement or Spouse’s Benefits – You must be at least 61 years and 9 months old and want your benefits to start no more than four months in the future. Apply at www.socialsecurity.gov/retireonline.
■ Disability – You can apply online for disability benefits or continue an application you already started. Apply for Disability at www.socialsecurity. gov/disabilityonline.
■ Extra Help with Medicare Prescription Drug Costs – Many people need assistance with the cost of medications. Apply for Extra Help at www.socialsecurity.gov/i1020.
■ Medicare – Medicare is a national health insurance program administered by the U.S. federal government that began in 1966. You can apply online or continue an application you already started at www.socialsecurity.gov/retireonline.
■ Supplemental Security Income (SSI) – SSI is a federal income program funded by general tax revenues designed to help aged, blind, and disabled people who have little or no income. You may be able to apply online if you meet certain requirements. See if you can apply online for SSI at www. socialsecurity.gov/benefits/ssi.
We’re here for you, securing today and tomorrow. Remember, the most convenient way to contact us anytime, anywhere is to visit www.socialsecurity.gov.
Maria Ortega is a public affairs specialist for the Social Security Administration. If you have Social Security questions, call 800-772-1213.