People who are employed by others have tax deductions from their salary each month. In addition, some of the money from their salary is also collected as social security benefits, which they receive after they turn 65 years old. However, there are many people who are self-employed or do freelance work. How do they become eligible for social security disability benefits? How does the system work for them?
The first and most important thing to understand is that if you do not pay taxes, you are not eligible for social security benefits. People who are self-employed can qualify for social security benefits as long as they have paid self-employment taxes and worked the required number of years to become eligible for social security benefits. For example, if you have worked just four years as a freelancer or have had your own business for only two years, you will not be eligible for social security benefits. In order to be eligible for social security benefits, you need to work for at least 10 years.
The Social Security Administration determines eligibility with a credit system. Essentially, for every year you work and pay taxes, you get four credits, and you need 40 credits in total to be eligible for social security benefits.
There are some business owners who are not required to pay the self-employment tax, especially those with S-corporations. These individuals will not be eligible for social society benefits unless they have paid into the tax system through some other job or means of income. While only individuals who have worked ten years and have 40 credits are eligible for social security benefits, there are some people who may be eligible with fewer credits – especially those with a disability.
All individuals who work in the US must pay into the tax system and have money deducted for social security. The maximum number of credits you can earn in a year is 4. It does not matter in which year the four credits are collected.
How much benefit does one get from social security?
The amount of disability benefits are based on how much earnings you have reported. The work credits have nothing to do with the amount; they simply qualify you for the benefits. The Social Security Administration uses complex formulas to determine how much benefit you will receive, but basically, it involves how much you have earned and how much tax you have paid. For example, if you paid very little tax, this means very little money was deducted for social security, and hence this also means that you will also get a very small amount of money in the form of social security benefits.
All self-employed people must file a self-employment tax form every year. The self-employment tax rate is 15.3%, and about 12.4% goes to social security and the rest to Medicaid. Therefore, if you want social security benefits, it’s best if you pay for your taxes. There is no free ride with social security. You get what you pay into the system.
Contact the Social Security Disability Lawyers at the Surface Law Firm
The determination of social security benefits is pretty simple when it comes to people who are in the workforce and pay their taxes through their employer. But when you are self-employed, you have to ensure you file your taxes every year. It doesn’t matter how much money you make. You still have to file your taxes. However, the amount of social security benefits you will receive is dependent on how much taxes you paid and how much you contributed towards the social security benefit fund.
For more information regarding SSDI benefits for the self-employed, you can talk to a social security disability lawyers at J. Robert Surface Attorney at Law. The team of social security disability lawyers at Robert Surface have handled many cases of self-employed individuals who want to ensure they get the benefits that they’ve worked hard for throughout their professional life. If you want to make sure you don’t lose out on the benefits you also have to make sure that you are filing your taxes properly and you are declaring your business income/self-employed income properly and accurately. Lots of self-employed people make the mistake of hiding their income so that they won’t have to pay a lot of tax. But this can go against you in the long run. For more information, call us today, and our social security disability lawyers will be happy to assist you.