All articles 6 min read

Social Security: If You Are Self-Employed

This guide presents selected U.S. government consumer education from Social Security Administration. References to “we” or “us” in the source material refer to the issuing agency. Source dates and links appear below.

Page references and publication numbers refer to the linked government publication. Figures identified by year apply to that edition, and illustrative examples are not estimates of your own benefit or costs.

Most people who pay into Social Security work for an employer. Their employer deducts Social Security and Medicare taxes from their paycheck, matches that contribution, sends taxes to the Internal Revenue Service (IRS), and reports wages to us. Self-employed people must report their earnings and pay their taxes directly to the IRS.

You’re self-employed if you operate a trade, business, or profession, either by yourself or as a partner. You report your earnings for Social Security when you file your federal income tax return. If your net earnings are $400 or more in a year, you must report your earnings on Schedule SE, in addition to the other tax forms you must file.

Paying Social Security and Medicare taxes

If you work for an employer, you and your employer each pay a 6.2% Social Security tax on up to $184,500 of your earnings. Each must also pay a 1.45% Medicare tax on all earnings. If you’re self-employed, you pay the combined employee and employer amount. This amount is a 12.4% Social Security tax on up to $184,500 of your net earnings and a 2.9% Medicare tax on your entire net earnings. If your earned income is more than $200,000 ($250,000 for married couples filing jointly), you must pay 0.9% more in Medicare taxes.

There are two income tax deductions that reduce your taxes if you’re self-employed:

  • 1. Your net earnings from self-employment are reduced by half the amount of your total Social Security tax. This is similar to the way employees are treated under the tax laws — the employer’s share of the Social Security tax is not considered wages to the employee.
  • 2. You can deduct half of your Social Security tax on IRS Form 1040. The deduction must be taken from your gross income when determining your adjusted gross income. It cannot be an itemized deduction and must not be listed on your Schedule C.

If you have wages, as well as self-employment earnings, the tax on your wages is paid first. This rule only applies if your total earnings are more than $184,500. For example, if you will have $100,000 in wages and $84,500 in self-employment income in 2026, you will pay the appropriate Social Security taxes on both your wages and business earnings. In 2026, however, if your wages are $100,000, and you have $85,500 in net earnings from a business, you don’t pay dual Social Security taxes on earnings greater than $184,500. Your employer will withhold 7.65% in Social Security and Medicare taxes on your $100,000 in earnings. You must pay 15.3% in Social Security and Medicare taxes on your first $84,500 in self-employment earnings, and a 2.9% Medicare tax on the remaining $1,000 in net earnings.

Work credits

You must have worked and paid Social Security taxes for a certain length of time to get Social Security benefits. The amount of time you need to work depends on your date of birth, but no one needs more than 10 years of work (40 credits).

In 2026, if your net earnings are $7,560 or more, you earn the yearly maximum of four credits — one credit for each $1,890 of earnings during the year. If your net earnings are less than $7,560, you still may earn credits by using the optional method described later in this fact sheet.

We factor in all your earnings covered by Social Security to figure your Social Security benefit. Be sure to report all earnings up to the maximum, as required by law.

Figuring your net earnings

Net earnings for Social Security are your gross earnings from your trade or business, minus your allowable business deductions and depreciation.

Some income doesn’t count for Social Security and shouldn’t be included in figuring your net earnings. Such income includes:

  • Dividends from shares of stock and interest on bonds unless you receive them as a dealer in stocks and securities.
  • Interest from loans unless your business is lending money.
  • Rentals from real estate unless you’re a real estate dealer or regularly provide services mostly for the convenience of the occupant.
  • Income received from a limited partnership.

Optional method

If your net earnings are less than $400, your earnings can still count for Social Security under the optional method of reporting. You can use the optional method when you have income from farming, non-farm income, or a combination of both. You can use the optional method five times in your lifetime when reporting non-farm income. There is no limit for using the optional method of reporting income from farming. Here is how it works:

  • If your gross income from farm self-employment was not more than $10,860 or your net farm profits were less than $7,240, you may report the smaller of two-thirds of gross farm income (not less than zero) or $7,240.
  • If your net income from non-farm self-employment is less than $7,840 and also less than 72.189% of your gross non-farm income, you may be able to use this method. You must be regularly self-employed, with net earnings from self-employment of at least $400 in two of the prior three years.
  • You can use both the farm and non-farm methods to report earnings. You can report less than your total actual net earnings from farm and non-farm self-employment. However, you can’t report less than your actual net earnings from non-farm self-employment alone. If you use both methods to figure net earnings, you can’t report more than $7,240.

NOTE: If you’re a farmer, you can use the optional reporting method every year. Having actual net earnings of at least $400 in a preceding year isn’t necessary. Also, other gross farm, net farm, and non-farm profit amounts may change each year.

For additional information, read Tax Guide for Small Business (IRS Publication No. 334) and IRS Schedule SE at www.irs.gov or call 1-800-829-4933.

How to report earnings

You must complete the following forms by April 15, after any year in which you have net earnings of $400 or more:

  • Form 1040 (U.S. Individual Income Tax Return).
  • Schedule C (Profit or Loss from Business) or Schedule F (Profit or Loss from Farming) as appropriate.
  • Schedule SE (Self-Employment Tax).

You can get these forms from the IRS website at www.irs.gov. Send the tax return and schedules, along with your self-employment tax, to the IRS.

Even if you don’t owe any income tax, you must complete Form 1040 and Schedule SE to pay Social Security self-employment tax. This is true even if you already get Social Security benefits.

Family business arrangements

Family members may operate a business together. For example, spouses may be partners or run a joint venture. If you and your spouse operate a business together as partners, you should each report your share of the business profits as net earnings on separate self-employment returns (Schedule SE). This is the case even if you file a joint income tax return. You and your spouse must decide the amount of net earnings each should report (for example, 50% and 50%). Also, you and your spouse who both materially participate in a jointly owned business and file a joint return can make an election to be taxed as a qualified joint venture instead of a partnership. Each must file a separate Schedule C or C-EZ.

Sources and publication details

The federal agency source text is U.S. government work in the public domain. Fynoptic selected, adapted, and formatted it for this guide. No agency endorsement is implied. Follow the linked sources for current program details and the rules applicable to your circumstances.

Back to all articles