what is earned income for self employed who receive social security benefits

[cassieaitken1]

I am planning to receive social security benefits and trying to understand what I can early as contractor while receiving these benefits, and what the IRS reports to social security as earned income.

I have spoken to Social Security people and they do not know.  Many times I have tried to speak to one who does.  They claim I have to send some form  to them monthly showing income and I cannot locate info on this anywhere.

I know the threshold is 1950 per month.  Or that x 12 for year.... 

If my net is within the threshold, the Social  Security told me that is irrelevant and there is some forumula the IRS uses that I need to understand?  That does not have to do with my net earned income...  And also some monthly formula?- which makes no sense as one month I have maybe a lot to set up new work, and anotheris less....

Regardless if I am not complicating this with any other moneys... how do I know what my net is monthy and yearly to not go over and if I do go over, how do I know what and when will happen?

Taxes are reported annually, 1099s 1 x year so I don't understand how this all happens also.


Thank you.

[VolvoGirl]

If you only have self-employment income your earned income is the Net Profit on Schedule C line 31 minus 1/2 the SE tax (the amount on Schedule 1 line 15).

How old are you?    There are 2 different things to know about social security. People get them mixed up all the time.   Social Security is saying your SS checks may be REDUCED.   Not if it's taxable or not.

1. Your actual SS checks

If you are over full retirement age your actual ss checks won't be reduced. Otherwise they will actually reduce your payments if you make too much other income in the prior year. See SS FAQ for working after retirement
https://www.ssa.gov/benefits/retirement/planner/whileworking.html

It says…
When we figure out how much to deduct from your benefits, we count only the wages you make from your job or your net profit if you're self-employed. We include bonuses, commissions, and vacation pay. We don't count pensions, annuities, investment income, interest, veterans benefits, or other government or military retirement benefits.

Special Earnings Limit Rule
https://www.ssa.gov/benefits/retirement/planner/rule.html

See page 5 for the special first year rule
https://www.ssa.gov/pubs/EN-05-10069.pdf

2. Income Tax (even the first year).

For any age up to 85% of Social Security becomes taxable when ALL your other income plus 1/2 your social security reaches:

Married Filing Jointly: $32,000

Single or head of household: $25,000

Married Filing Separately: 0

Turbo Tax doesn't get involved with how much benefits you can get or how much income you can earn. That isn't part of your tax return. That is just with SS sending you the benefit checks. Your SS benefits can still be taxable.

Social Security doesn't get involved with how much of your SS is taxable. Social Security only is telling you How much can I earn and still get BENEFITS.

[dmertz]

"If you only have self-employment income your earned income is the Net Profit on Schedule C line 31 minus 1/2 the SE tax (the amount on Schedule 1 line 15)."

That's how net earnings are determined for income-tax purposes  However, for Social Security purposes, net earnings are the amount on Schedule SE line 4c.  Generally that would be 92.35% of net profit.  42 USC § 411(a)(11)

The IRS reports to the Social Security Administration the amount on Schedule SE line 4c.