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Joseph
Joseph, Lawyer
Category: California Employment Law
Satisfied Customers: 4885
Experience:  Extensive experience representing employees and management
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We are thinking of starting a small home business, mostly working

Customer Question

We are thinking of starting a small home business, mostly working part-time (promotional & advertising specialties). My husband turned 67 in Jun 2011; retired from federal service Sept 2011 and currently receives a CSRS annuity along with SS Retm benefits (began retroactive to March 2011). I am 58 and received a discontinued service retirement when the Air Force Base we worked at was BRAC'd in Sep 2011. I receive a FERS annuity and FERS supplement equal to what a SS Retm benefit would be if I was 62. The supplement will stop when I reach age 62 or it will reduce (1 for 1) if I earn more than the SS earnings cap (as if was 62 and receiving SS Retm). We live in a community property state (don't know if that is important). We need to know if my husband starts the business under his name and I work as his employee would that affect his Social Security retirement. We understand that he can earn a salary and that there is no earnings cap for him after age 66, but if he starts a business after retiring and starting his SS Retm benefits is there a question as to whether he is truly retired. He does not plan to work full-time as he has medical issues that will require less than full-time work. If instead, I owned the business is my spouse considered an employee? I am concerned because if I owned the business there is a possibility that I will lose or reduce my FERS DRS supplement ($980 per month) and that income is needed right now. Which is the best approach? Under Social Security rules are our earnings looked at separately or as with Medicare is the Married filing jointly gross earnings used to make these determinations? Sorry for all the questions but before we need to be sure we make the right decisions or forgo this business opportunity outright.
Submitted: 2 years ago.
Category: California Employment Law
Expert:  Joseph replied 2 years ago.
Hello and welcome to JustAnswer.

Since your husband has reached full retirement age, his benefits will not be reduced based upon the income that he recieves from the business.

This would be the same regardless of whether he owns the business or you own the business and he works as your employee.

Your earnings are treated separately under Social Security, so your earnings wouldn't affect how much your husband receives in Social Security benefits or vice versa when you become eligible to receive Social Security benefits.

I hope this information helps.
Customer: replied 2 years ago.

Our real concern is whether he is considered retired under Social Security regulations if he now starts/owns a business. Or is that not a concern once an individual has reached full retirement age?

 

Also, we understand that if he hires employees he would pay social security/medicare, state and federal taxes on those employees BUT would he also pay these taxes on his earnings too?

 

Thanks!

Expert:  Joseph replied 2 years ago.
Once he has reached full retirement age, he is considered retired regardless of whether he continues to work or if he owns and starts a business, so his benefits will not be reduced based on whether he owns the business or works as an employee.

He would have to pay self-employment taxes on his earnings, including state and federal taxes, but he wouldn't have to pay social security and medicare out of his self-employment earnings.
Joseph, Lawyer
Satisfied Customers: 4885
Experience: Extensive experience representing employees and management
Joseph and other California Employment Law Specialists are ready to help you
Customer: replied 2 years ago.
Thanks for your assistance!
Expert:  Joseph replied 2 years ago.
Thank you; best of luck!

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