I am 75 years old and I have a part time business. Why do I still have to pay into Social Security on my profit

Forum|Forum|2 years ago
October 16, 2023
4 replies
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TurboTax Home & Biz Windows

Best answer by VolvoGirl

Expert Reviewed

Sorry there is no age limit. Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment. You pay 15.3% SE tax on 92.35% of your Net Profit (If it is greater than $400). The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare. So you get social security credit for it when you retire.

VolvoGirlAnswer

Level 15

Expert Reviewed

Mike9241

Level 15

if your income from this activity is significant, a personal opinion, you may want to discuss with a tax professional the advantages and disadvantages of converting to an S-Corporation. With an S-Corp some of the profits come out as a salary to you from which both you and the S-Corp will pay social security and medicare taxes. the remaining profit would not be subject to these taxes. There are many pros and cons to an S-Corp which need to be discussed with a pro who can look over your entire tax situation for proper advice. This is beyond the scope of this forum.

Mike9241

taxlady28

Level 10

Your social security monthly benefit will be increased every year based on you paying more into the system.

dmertz

Level 15

@taxlady28 , only the highest 35 years of earnings, adjusted for inflation, are used in calculating the benefit, so there is no guarantee that paying more into Social Security will increase the benefit.