The “Self-Employed” Surprise: Net Earnings vs. Gross Income
Confused by Social Security?
Business owners love tax deductions. But writing everything off hurts your Social Security benefit.
The Rule
Social Security looks at your Net Earnings (Schedule SE), not Gross Revenue. If you show $0 profit, you get $0 credit.
The Trade-Off
Minimize taxes today = tiny Social Security check tomorrow. Maximize benefits = higher taxes today.
Self-employed?
Let’s analyze if your tax strategy is sabotaging your retirement income.
Strategy
Showing some profit is usually better than showing zero to avoid a hole in your 35-year record.
About Author
Ray R. Harris
Ray R. Harris, RSSA®, partners with tax and legal professionals to provide specialized Social Security claiming analysis for high-net-worth clients aged 58–70. A former executive with an MBA and background in Finance, Ray mitigates liability for his partners by ensuring their clients optimize spousal benefits, tax efficiency, and lifetime income.
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