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My income is from consulting proessional services through my…

My income is from consulting...
My income is from consulting proessional services through my LLC, treated as a Sub-chapter S corp for tax purposes as well as from the sale of oil from wells in which I have an interest. I do not have any W-2 income, just the 1099 consulting via LLC and distributions from oil sales. Do these income sources count towards the limit I can earn and still receive maximum social security? Thank you.
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Answered in 16 minutes by:
9/3/2013
LawTalk
LawTalk, Attorney
Category: Social Security
Satisfied Customers: 37,876
Experience: I have 30 years of legal and litigation experience, including representing clients before the U.S. Social Security Administration.
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Good morning Mike,

I'm Doug, and I'm sorry to hear of the confusion. My goal is to provide you with excellent service today.

So long as you are earning self employment income---which will be noted on your 1099 for the consulting work that you do, you must pay self employment tax on that income received from consulting, and that income will count toward the 40 quarterly credits that you must earn in your lifetime to qualify for social security retirement as well as MediCare.

For example, in 2013, for each $1,160.00 that you earn and pay social security taxes on, you are credited with up to one quarter unit by social security. You may earn no more than 4 units in a calendar year---but so long as you earn at least that $4,640.00 in 2013, you will have obtained your maximum quarter credits toward retirement for the year.

Please keep in mind that, even though you have already paid your deposit money over to JustAnswer, until you rate me highly for my service, I will not be paid for having assisted you with your questions.

If you have additional follow-up questions, you may reply back to me using the Reply to Expert link and I will be happy to assist you further until your questions have been answered to your satisfaction.


I wish you the best in your future.

Doug

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Customer reply replied 4 years ago

I am currently receiving social security but my understanding is I can only earn so much a year, but do these non W-2 sources of income count to reduce what I can receive .

Good morning Mike,

Thank you for clarifying your question. It was not apparent that you were asking about how much you may earn and still collect benefits. In order to give you a clear and concise answer, I will need some additional information about the circumstances, please.

1. Are you receiving Disability benefit or retirement benefits?
2. How old are you now?

Doug

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Customer reply replied 4 years ago

Doug, I am 65 and retirement benefits.

Thank you Mike,

First, the oil you sell is NO considered active income for purposes of social security. It is passive, investment income and does not affect your benefits. Only income that you obtain from actual work---your self employment income----is considered. Because you are self employed you have strict rules regarding not only how much you may earn---but even more limiting, rules regarding how many hours a month you may work. So as you are self employed, be very aware of these limitations.

There are two separate rules. One for employees and one for self employed persons.

As an employee, if you retire in mid-year, there is a special rule that applies to earnings for the first year of retirement. Under this rule, you can get a full Social Security check for any whole month you are retired, regardless of your yearly earnings. In 2013, a person under full retirement age for the entire year is considered retired if monthly earnings are $1,260 or less.

After your first calendar year in retirement, Social Security deducts $1.00 for each $2.00 you earn above a certain level---which in 2013 is $15,120.00.

In the year you reach full retirement age, Social Security will just deduct $1 in benefits for every $3 you earn above a different limit, but you are only penalized for the months before your month of full retirement, and in those months---no matter how many or few they are, the limit is $40,080.

If you are someone's employee the 45 hours a month does not apply to you.

*****However, if your income comes from self employment, Social Security, in addition to the monthly $1,260 limitation, also considers how much work you do in your business, to determine whether you are retired. They look at the amount of time that you spend working. In general, if you work more than 45 hours a month in self-employment, you are not retired; if you work less than 15 hours a month, you are retired. If you work between 15 and 45 hours a month, you will not be considered retired if it is in a job that requires a lot of skill or if you are managing a sizable business.

For the next year, and other years before your full retirement age, the only limitation is on your annual income. If you are under full retirement age for the entire year, Social Security will deduct $1 from your benefit payments for every $2 you earn above the annual limit.


That limit is $14,640.


Please keep in mind that, even though you have already paid your deposit money over to JustAnswer, until you rate me highly for my service, I will not be paid for having assisted you with your questions.

If you have additional questions, you may reply back to me using the Reply to Expert link and I will be happy to assist you further until your questions have been answered to your satisfaction.

I wish you the best in your future.

Doug

LawTalk
LawTalk, Attorney
Category: Social Security
Satisfied Customers: 37,876
Experience: I have 30 years of legal and litigation experience, including representing clients before the U.S. Social Security Administration.
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Thank you for your positive rating of my service, Mike. It has been my pleasure to assist you and I hope than you will ask for me on JustAnswer should a future need ever arise. I am generally available at least 6 days a week, and often 7, and it would be my privilege to assist you again in the future.

Please feel free to bookmark the following link so you can request me to answer any future legal questions you may have, or simply ask for me by name in the first sentence of your new question:
http://www.justanswer.com/law/expert-lawtalk/

Thanks again.

Doug

When you receive your Customer Satisfaction Survey from JustAnswer, please do rate me highly (9-10) there as well. It would be tremendously appreciated.

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