Social Security benefits for Self Employed

Social Security has special procedures for Social Security Retirement benefits claims from self employed business owners. Social Security will assume that self employed business owners have earnings that are over the limit. It is up to the self employed business owners to prove to Social Security that their self employment income during retirement has been reduced. Social Security will be very strict on how they assess self employed business owners' situations. They do this to prevent Social Security Retirement benefits going to people who have not really retired.

Self employment income

For Social Security purposes, net losses from self employment may be deducted from gross wages and other self employment income for the year.

For Social Security Retirement benefits, you can exclude all self employment income relating to services rendered before your first month of entitlement but received in the year after the first year of entitlement.

If you have sold your business

If a self employed business owner has sold his or her business, Social Security will want to see all the documents relating to the sale of the business to ensure that the sale is legitimate. There are self employed business owners who claim to have sold their businesses or have reduced income in order to qualify for Social Security Retirement benefits.

If you continue your business but claim to have reduced income

If you are still working on your business but claim to have lower income than the Social Security limit, then Social Security will want an explanation of why your income is reduced. Your self employment income reduction must correspond to your reduction in services and duties.

Providing documents to Social Security

Social Security will require you to provide a detailed official statement of your business differentiating your pre-retirement duties and post retirement duties. You will have to provide all details of your customers and suppliers, hours of work you put into each activity, and much more.

Social Security will also require you to submit your personal and business tax returns for the last 2 or 3 years. Social Security can also request any other documents they deem necessary based on your business.

After you have submitted all the documents requested, Social Security will check up on  your documents. They will call your suppliers and customers to verify if you are still performing duties which you claimed to have stopped. Occasionally, a Social Security Field Representative may visit your place of business and pose as a customer to see if you are working there.

Social Security will check your tax returns carefully to see if you have overstated your deductions or having any irregular transactions through the business.

When you file for Social Security benefits, if you are not selling your business or closing your business, you should be prepared to be aggressively questioned by Social Security.

Re-evaluating your case

Once your qualify for Social Security Retirement benefits income, Social Security will still check up on your case regularly. For example, they can check in 3 months, 6 months, or a year. If they check up on your case and decided that you have not fully retired, they may demand a refund from you for the period of time which you received Social Security benefits.