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If You Are Self-Employed
If You Are Self-Employed
2024
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 us. But self-employed people must report their
earnings 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 le 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 le.
Paying Social Security and Medicare taxes
If you work for an employer, you and your employer
each pay a 6.2% Social Security tax on up to $168,600
of your earnings. Each must also pay a 1.45% Medicare
tax on all earnings. If you’re self-employed, you pay the
combined employee and employer amount. This amount
is a 12.4% Social Security tax on up to $168,600 of your
net earnings and a 2.9% Medicare tax on your entire net
earnings. If your earned income is more than $200,000
($250,000 for married couples ling jointly), you must
pay 0.9% more in Medicare taxes.
There are 2 income tax deductions that reduce your taxes.
First, your net earnings from self-employment are reduced
by half the amount of your total Social Security tax. This
is similar to the way employees are treated under the
tax laws, because the employer’s share of the Social
Security tax is not considered wages to the employee.
Second, you can deduct half of your Social Security tax
on IRS Form 1040. But the deduction must be taken
from your gross income when determining your adjusted
gross income. It cannot be an itemized deduction and
must not be listed on your Schedule C.
If you have wages, as well as self-employment earnings,
the tax on your wages is paid rst. But this rule only
applies if your total earnings are more than $168,600.
For example, if you will have $100,000 in wages and
$68,000 in self-employment income in 2024, you will pay
the appropriate Social Security taxes on both your wages
and business earnings. In 2024, however, if your wages
are $100,000, and you have $69,600 in net earnings
from a business, you don’t pay dual Social Security taxes
on earnings more than $168,600. Your employer will
withhold 7.65% in Social Security and Medicare taxes
on your $100,000 in earnings. You must pay 15.3% in
Social Security and Medicare taxes on your rst $68,600
in self-employment earnings, and 2.9% in Medicare tax
on the remaining $1,000 in net earnings.
Work credits
You must have worked and paid Social Security taxes
for a certain length of time to get Social Security
benets. 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 2024, if your net earnings are $6,920 or more, you
earn the yearly maximum of 4 credits — 1 credit for each
$1,730 of earnings during the year. If your net earnings
are less than $6,920, you still may earn credit by using
the optional method described later in this fact sheet.
We use all your earnings covered by Social Security to
gure your Social Security benet. Be sure to report all
earnings up to the maximum, as required by law.
Figuring your net earnings
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 guring your net earnings. Such
income includes any of these:
• Dividends from shares of stock and interest on
bonds, unless you receive them as a dealer in
stocks and securities.
• Interest from loans, unless your business
is lending money.
• Rentals from real estate, unless you’re a real
estate dealer or regularly provide services mostly
for the convenience of the occupant.
• Income received from a limited partnership.
Optional method
If your actual net earnings are less than $400, your
earnings can still count for Social Security under an
optional method of reporting. You can use the optional
method when you have income from farming, non-farm
income, or a combination from both. You can use the
SSA.gov
optional method ve times over the course of your life
when reporting non-farm income. There is no limit for
using the optional method of reporting farm income.
Here is how it works:
• If your gross income from farm self-employment was
not more than $9,840 or your net farm prots were
less than $7,103, you may report the smaller of 2/3
of gross farm income (not less than 0) or $6,560.
• If your net income from non-farm self-employment is
less than $6,560 and also less than 72.189% of your
gross non-farm income; also, if you had net earnings
from self-employment of at least $400 in two of the
prior three years.
• You can use both the farm and non-farm methods
to report earnings. You can report less than your
total actual net earnings from farm and non-farm
self-employment. However, you can’t report less
than your actual net earnings from non-farm self-
employment alone. If you use both methods to gure
net earnings, you can’t report more than $6,560.
NOTE: If you’re a farmer, you can use the optional
reporting method every year. Having actual net
earnings of at least $400 in a preceding year isn’t
necessary. Also, other gross farm, net farm, and non-
farm prot amounts may change each year.
For additional information, read Tax Guide for Small
Business (IRS Publication No. 334) and IRS Schedule
SE at www.irs.gov or call 1-800-829-4933.
How to report earnings
You must complete the following by April 15, after any
year in which you have net earnings of $400 or more:
• Form 1040 (U.S. Individual Income Tax Return).
• Schedule C (Prot or Loss from Business)
or Schedule F (Prot or Loss from Farming)
as appropriate.
• Schedule SE (Self-Employment Tax).
You can get these forms from the IRS on their website
at www.irs.gov. Send the tax return and schedules,
along with your self-employment tax, to the IRS.
Even if you don’t owe any income tax, you must
complete Form 1040 and Schedule SE to pay
self-employment Social Security tax. This is true even
if you already get Social Security benets.
Family business arrangements
Family members may operate a business together.
For example, spouses 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
prots as net earnings on separate self-employment
returns (Schedule SE). This is the case even if you le
a joint income tax return. The partners must decide the
amount of net earnings each should report (for example
50% and 50%). Also, spouses who both materially
participate in a jointly owned business, and le a joint
return, can make an election to be taxed as a qualied
joint venture instead of a partnership. Each must le a
separate Schedule C or C-EZ.
Contacting Us
The most convenient way to do business with us is to
visit www.ssa.gov to get information and use our online
services. There are several things you can do online:
apply for benets; start or complete your request for
an original or replacement Social Security card; get
useful information; nd publications; and get answers to
frequently asked questions.
When you open a personal my Social Security account,
you have more capabilities. You can review your
Social Security Statement, verify your earnings, and
get estimates of future benets. You can also print a
benet verication letter, change your direct deposit
information (Social Security beneciaries only), and
get a replacement SSA-1099/1042S. Access to your
personal my Social Security account may be limited for
users outside the United States.
If you don’t have access to the internet, we offer many
automated services by telephone, 24 hours a day, 7 days a
week, so you may not need to speak with a representative.
If you need to speak with someone, call us toll-free at
1-800-772-1213 or at our TTY number, 1-800-325-0778,
if you’re deaf or hard of hearing. A member of our staff
can answer your call from 8 a.m. to 7 p.m., Monday
through Friday. We provide free interpreter services
upon request. For quicker access to a representative, try
calling early in the day (between 8 a.m. and 10 a.m. local
time) or later in the day. We are less busy later in the
week (Wednesday to Friday) and later in the month.
Social Security Administration
Publication No. 05-10022
January 2024 (Recycle prior editions)
If You Are Self-Employed
Produced and published at U.S. taxpayer expense
