self employeed income for Social security credit/quarter

[Casey007]

Please someone help. Thanks

I have regular job which does bot contribute to social security to earn a quarter. From my privoius job which contributed to earn SS quarter I ran short of one quater before I changed job. So in 2024 i did some side job to earn my last quater. My question is for this self employed situation I had to earn at least $1730 to earn that last quater so I plug all numbers on turbo tax delux 2024 tax year, " what line on SE form will tell me that my earning is above $ 1730 amount? Is SS quarter is based off QBI income? I am confuse here. Please guide me as April deadline is approching fast.

Thank you so much,

Casey

[LeticiaF1]

When you are self-employed, the amount that gets reported to Social Security is your net income.  Your net income is your gross income minus any business expenses.  

If you are looking at Schedule SE, the amount is on line 4c.  If you look at Schedule C, your net income is on line 31.  

Calculating Your Net Earnings From Self-Employment

[Edited 4/08/25 | 8:38 AM PST]

[Casey007]

Attn: LeticiaF1,

  Thank you for great help, appreciate it.  So, on form SE line 2 and schedule C line 31 will both amounts will be the same $ amount? 

OK for year 2023 I had side income which was net $ 1645 for SE enough to earn my quarter as $ 1640 was required to earn a quarter but SS did not do that, when I ask SSA they said, you are still short of your last quarter. This confuses me, why what happened? That's why I wanted to clarify. Any more thoughts on this?

Another question: this is the first time I owe to IRS and for 2025 I may not owe but to expect a refund for 2025 tax year. For 2024 I will pay all, now do I still make estimated quarterly payments to avoid any tax penalty or use the "Harbour Safe" method (which is pay it all for the current year tax) 

Thank you so much,

Casey

[DianeW777]

Yes, the same number will be on Schedule C, Line 31 and Schedule SE Line 2. However the income used by the Social Security Administration is on Schedule SE, Line 4c. (SE income x .9235).  Reduced to help self employed individuals by lowering their business net profit before applying the social security or self employment tax.

Your net income based on your comments, for 2023 was $1,645. We would not be able to explain what the Social Security Administration (SSA) indicated you should make for each quarter. The line numbers will tell you what you earned for the entire year in 2024 (and 2023).

If you believe you will not owe in 2025 you do not need to follow the information next. If you want to be safe you can uses it to see what you should pay to be sure you have no underpayment penalty. 

The information below will explain when an underpayment penalty would kick in for you in 2025. The simplest way to cover your tax liability, and there could be some balance due when you file, is to pay at least as much as your tax is for 2024 (line 24, Form 1040). As long as you pay this amount in estimated payments (divide by 4) equally throughout the tax year and withholding from an employer, you would have no penalty. Take the information into account below.

Generally, you can avoid the penalty if your total timely estimated payments and withholdings are greater than or equal to the lesser of:

• 90% of the total tax after credits for the current year, or
• 100% of the total tax after credits in the prior year
• See one exception below.

You can also avoid the penalty if the amount you owe is less than $1,000 as long as any estimated tax payments you made are timely.

Note: High-income taxpayers. If your adjusted gross income (line 11 of your 2023 Form 1040) is greater than $150,000 (or $75,000 if you're married and file a separate return from your spouse), you can avoid a penalty by paying at least 110% of your total tax from the prior year.

@Casey007 

[Edited: 04/08/2025 | 8:30 AM PST]

[Casey007]

Thank you Diane, your answer is very helpful, today I also called IRS and the agent estimated my 2025 tax so I will pay that in 4 payments to make IRS happy.

Appreciate your time and help.

Thank you, 

Cassey 

[dmertz]

The answers above are incorrect.  Your earnings credit comes from Schedule SE line 4c, not line 2.  To achieve at least $1,730 on line 4c your net profit would need to be at least $1,873.

[DianeW777 subsequently made the correction.]

[dmertz]

It appears that @DianeW777 corrected her reply to show that line 4c of Schedule SE is the relevant line.  As I mentioned, Schedule C line 31 would need to be at least $1,873 to result in $1,730 of credited compensation.

[DianeW777]

The update now includes the expanded information for better clarification. Thank you for the clarification dmertz.

As an additional side note, the reduction of the self employment net profit before applying the self employment tax is because Congress was trying to give self employed taxpayers a small break by reducing the self employment income by 7.65% (the total social security and medicare tax combined paid by employees) before calculating their self employment tax.

• 1 minus .0765 = .9235
• All net self employment income is now reduced by taking the total net profit x .9235 which produces the actual income used by the SSA.

Please update if you have more questions or need further assistance and we will help.

@Casey007 

[dmertz]

The reduction is by an amount equivalent to the employer-paid portion of Social Security and Medicare taxes.  This makes the result roughly equal to amount of wages that one would have received had the business been a single-member corporation and the corporation paid the individual the entire company profit as wages.

[Casey007]

Dear Mertz and Diane, 

Thankyou for this crucial clarification on form SE line 4c is the valve that go to SSA, I also checked on my previous years earning for SSA from the form SE  it matched with SE line 4c also some thing I learned that they use multiple of 10 to record your earning so they up or lower your earning to nearest multiple of 10. that  means for $ 1526 it will reduced to 1525 and for $ 1529 will go up 1530. strange? 

One more question still bugging me that when IRS do withhold tax from W2 with every pay check for current year 2025 then is there still need to pay estimated tax for 2025 in addition to W2.  Its look like once I earned my quarter with SSA I will not do any side work., so this will get rid of SE form fro me (one less headach) So do I still make estimated tax payment for 2025. I am an individule with just one full time job and my job doed not contribute to SSA  for this reason I did side job. Please help. Some good folks help me bhut this is still an issue with me. 

Thank you, 

Cassy007

[RobertB4444]

If you are no longer doing self-employed side work and your main job is withholding enough tax from your salary to cover your tax bill at the end of the year then there is no longer any reason to submit quarterly estimated payments.

@Casey007 

[Casey007]

Hello Robert,

  First sorry for late reply.

I hope that I am done with this self-employment for earning SS quarter. I also talked with live turbo tax, tax expert, he said, ask your employer to withhold extra tax per paycheck to cover additional tax and avoid estimated tax payments for current year, so I did that, hoping no future problems. 

Thank you, all for great advice.

Casey