Self employed how do i pay social security

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. Social Security qualification requirements are the same for self-employed and traditional workers. You must earn 40 credits. This means you must work 10 years in order to qualify, though these 10 years do not have to be consecutive. The dollar amount required to earn one credit may change from year to year. Your Social Security benefit is based on your average monthly income during your 35 highest-earning years, adjusted for inflation.

If you haven't worked for 35 years, your calculation will include zeros that bring down your average. For traditional workers, the income listed on your W-2 is the amount that the SSA records, but it's more complicated for the self-employed.

Independent workers can claim tax deductions for things like office supplies, business travel, a home office, or any other work-related expense. All of these reduce your taxable income this year, saving you money in income taxes. But the catch is that the SSA looks at your taxable income for the year when calculating your Social Security benefits. So by taking advantage of the tax breaks today, you could be reducing the amount of Social Security benefits you're entitled to in the future.

This raises the question of whether it's smarter to take the tax deductions now or skip them and potentially increase your Social Security checks later. There isn't a clear-cut answer, but in most cases, you're probably better off taking the deductions this year. It's difficult to predict how much more you'll actually get from Social Security by reporting a higher taxable income this year, especially with the future of Social Security so uncertain right now.

What is Self-Employment Tax? Self-Employment Tax Rate The self-employment tax rate is Self-Employment Tax Deduction You can deduct the employer-equivalent portion of your self-employment tax in figuring your adjusted gross income. Self-Employment Health Insurance Tax Deduction Under Section of the Small Business Jobs Act, a deduction, for income tax purposes, is allowed to self-employed individuals for the cost of health insurance.

Family Caregivers and Self-Employment Tax Special rules apply to workers who perform in-home services for elderly or disabled individuals caregivers. Related Topics Business Taxes. Estimated Taxes. Online Tax Calendar. Page Last Reviewed or Updated: Jun Share Facebook Twitter Linkedin Print. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights.

Measure content performance. Develop and improve products. List of Partners vendors. The Balance Small Businesses Resources. Table of Contents Expand. Table of Contents. How to Pay Social Security Taxes. Social Security Credits. Social Security Benefits. Claiming Your Benefits. By Halley Bondy. She is an expert in startups, entrepreneurship, business financing, the U. Learn about our editorial policies. Fact checked by Emily Ernsberger.