Self employment can be a tricky area when it comes to determining eligibility for Social Security retirement and disability purposes. The majority of workers in the United States pay into Social Security through payroll taxes that are deducted from their paychecks, but what about people who are self employed and don’t have an employer who directly deducts Social Security taxes?
Although it can be somewhat confusing, Social Security has provided information to make it clearer of how the self employed are covered for Social Security retirement and disability. There are some things to remember, if you don’t pay into Social Security, either through an employer or on your own, you run the risk of having limited coverage for the purposes of retirement and disability benefits. This is something you want to be aware of so you are not surprised when it comes time to apply for a program.
When Did Social Security Coverage Begin For Self-Employed People?
Most self-employed people became covered by Social Security in 1951.
What Are The Exceptions?
- Farmers, ministers, and some other individuals (including certain professionals) were not covered until 1955;
- Additional groups of professionals were covered for taxable years ending after 1955; and
- Self-employed doctors of medicine were covered for taxable years ending on or after December 31, 1965.
There is a complete section of regulations for a detailed list of activities excluded from self-employment coverage.
How Is Self-Employment Income Calculated?
“Self-employment income” that is creditable for Social Security is based on “net earnings from self-employment” derived from a “trade or business” covered by the law. Payment from self-employment that is not covered under Social Security is included when figuring income for earnings test purposes.
If you are unclear about your eligibility for Social Security programs because you are self employed, you can determine this by contacting Social Security.
