Claiming Rules
Understanding Social Security Rules for the Self-Employed
Verified against SSA POMS as of September 15, 2026
The short answer
Self-employed individuals generally earn Social Security coverage based on their net earnings from self-employment (NESE). If net earnings are $400 or more for the year, the income is generally subject to self-employment tax and reported with the individual's federal income tax return. Self-employed workers pay both the employee and employer portions of Social Security and Medicare taxes.
Social Security Coverage for the Self-Employed
Since 1951, most self-employed individuals in the United States are covered by Social Security if they have net earnings from self-employment of at least $400 per year. This requirement applies to all citizens and residents in the country. [NL 00902.500]
NL 00902.500 View source ›Calculating Self-Employment Income
The term "net earnings from self-employment" refers to gross income from a trade, business, or profession minus allowable deductions. For Social Security purposes, self-employed individuals calculate their net earnings without any additional deductions for Social Security work credits and benefits eligibility. [20 CFR 404.1096]
20 CFR 404.1096 View source ›Income Reporting Requirements
Self-employed persons with annual net earnings of $400 or more must report these earnings as part of their Federal tax returns using Schedule SE. Even if no Federal income tax is due, reporting is mandatory to ensure Social Security credits are updated accurately. [NL 00902.500]
NL 00902.500 View source ›Exclusions from Self-Employment Income
Certain types of income are not included in net earnings from self-employment for Social Security purposes. These exclusions include farm rental income without material participation, dividends, retirement payments to partners, capital gains, and rental income unless specific conditions apply. [NL 00902.500]
NL 00902.500 View source ›International Agreements and Exemptions
Under international agreements, a self-employed individual typically falls under the jurisdiction of the country they reside in. Special provisions can exempt individuals from U.S. Social Security taxes if they are subject to another country's Social Security laws; they must then document the exemption. [RS 02002.355]
RS 02002.355 View source ›Frequently asked
What qualifies as self-employment income for Social Security?
Self-employment income refers to net earnings from self-employment activities that amount to at least $400 per year and are derived from a trade or business covered by Social Security.
How do I report self-employment income for Social Security?
You must report net earnings of $400 or more by completing Schedule SE as part of your Federal tax return, regardless of whether you owe Federal income tax.
Are any types of income excluded from self-employment earnings?
Yes, exclusions include farm rental income without material participation, dividends, retirement payments, capital gains, and certain rental income.
What happens if self-employment income is not reported on time?
The Social Security Administration may not credit unreported self-employment income to your earnings record if it's reported late, typically after 3 years, 3 months, and 15 days from the tax year-end.
Can international self-employed workers be exempt from U.S. Social Security taxes?
Yes, under certain international agreements, self-employed workers may be exempt if they are subject to the Social Security laws of their resident country and can provide a certificate of coverage.