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Level 1
posted Oct 27, 2021 9:45:21 AM

Social Security Retirement Income & LLC Business Profits

I'm collecting SSI Retirement Income and own a brick and mortar business i.e. flower shop.

Last year for 2020, I paid myself as a W-2 wage earner $16,150.  The business made on Schedule 1, Line 3

$ 29,435.  Social Security Administration added the business income to my personal income W-2 and states they overpaid SSI Retirement Income by $9000 +.  SSA states this is an Overpayment.

This profit is working capital for the business, it was not taken out of the business.  

Do I owe this back to SSA or did they error in asking for an overpayment.

1 3 354
3 Replies
Employee Tax Expert
Oct 27, 2021 10:37:10 AM

The SSA deals with overpayment is several different ways. Please find more information in the link to the SSA following. https://www.ssa.gov/ssi/text-overpay-ussi.htm 

 

Here are the various ways they state to deal with overpayments: 

 

"WHAT WILL WE DO IF THERE IS AN OVERPAYMENT?

We will send you a notice explaining the overpayment and asking for a full refund within 30 days.  If you are currently getting payments and you do not make a full refund, the notice will:

 

 
  • propose to withhold the overpayment at the rate of the lesser of 10 percent or the entire monthly payment; 
  • state the month the proposed withholding will start;
  • fully explain your appeal rights;
  • explain how you can ask us to review and waive the overpayment, so you may not have to pay it back; and
  • explain how you can appeal our decision."

Level 1
Oct 27, 2021 11:27:56 AM

You didn’t answer the question.  I don’t need help in figuring out how to pay it.  I have already made an appeal and it is in Review Status.  What is your opinion, do I owe it?

Employee Tax Expert
Oct 27, 2021 11:33:25 AM

When you say you paid yourself as a W-2 wage earner, there is some confusion.  A sole proprietor cannot pay themselves W-2 wages. 
In regards to the business income flowing to your Schedule 1 from Schedule C, it is definitely income to you and should be included as income for purposes of the SSA calculating your benefits.