I searched for two days online and on the Social Security Administration (SSA) web site and could not locate an answer to this question.
I know that if you start collecting social security benefits before you reach full retirement age (FRA) and you have self employment income, there are offsets to your social security benefits if your net self-employment earnings in any month or year exceed a certain amount, or if you spend too much time at it (or if your self-employment income requires high skills) as part of something called the earnings test.
I believe the SSA also excludes certain self employment expense deductions when looking at the earnings test. For example, they don't exclude expense deductions for payroll to a family member and they don't exclude contributions to an IRA, etc. While those are legitimate deductions that count toward lowering your taxable income, they don't count in the SSA earnings text when deciding whether they will reduce your social security benefits.
Deductions like rent, equipment, office supplies, advertising and the like are allowable expenses when the SSA calculates the earnings test. What I'm trying to find out, which seems to be a state secret, is what expenses are allowed and not allowed with regard to the SSA earnings test? Are SE taxes an allowable deduction?
