Why is the lesser amount on my SE Tax form of my returns reported to SS for my "benefit income"?
Ex. I am self employed, my net income is $53,660, which gets transferred to the SE Tax form to calculate what I owe for that, and yet the SS benefits website is reporting the LESSER number on that form to calculate my benefits, so they're picking up the $49,555, not the net income of $53,660. Why?
Hi. The lower amount, which should be 92.35% of your net self employment earnings, is the amount on which you actually pay Social Security taxes (https://www.ssa.gov/pubs/EN-05-10022.pdf). Self-employed people are only required to pay self-employment, or Social Security, taxes on 92.35% of their actual net earnings. Social Security only credits the amount of earnings on which a person pays Social Security taxes, which is why that amount is shown on your Social Security earnings history.