By Brenda Brown
Social Security Public Affairs Specialist in Fayetteville, NC
If you are not self-employed, Social Security taxes typically come out of your paycheck automatically. You and your employer each pay a 6.2 percent Social Security tax on up to $132,900 of your earnings and a 1.45 percent Medicare tax on all earnings in 2019. You do not have to do anything extra for the coverage you will one day receive because your employers handle the deduction as well as matching that contribution. Then they send the taxes to the Internal Revenue Service (IRS) and report your wages to Social Security.
If you are self-employed, the process is a little different. You report your earnings for Social Security and pay your taxes directly to the IRS when you file your federal income tax return. You pay the combined employee and employer amount, which is a 12.4 percent Social Security tax on up to $132,900 of your net earnings and a 2.9 percent Medicare tax on your entire net earnings in 2019. You are considered self-employed if you operate a trade, business or profession, either by yourself or as a partner. If your net earnings are $400 or more in a year, you must report your earnings on Schedule SE, in addition to other tax forms you must file.
Net earnings for Social Security are your gross earnings from your trade or business, minus your allowable business deductions and depreciation. Some income does not count for Social Security and should not be included in figuring the net earnings.
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.
You can read more about self-employment and Social Security at www.socialsecurity.gov/pubs/