Q: How would LLC income affect my Social Security benefit?
I am receiving Social Security retirement benefits. I have a rental property that nets about $4000.00 per year. If I put this property into an LLC (North Carolina), will I have to pay FICA? Will it affect the benefit I currently receive?
A: Once you reach full retirement age, there is no limit on how much you can earn and still receive your Social Security retirement benefits without any reduction.
If you began receiving Social Security retirement benefits before your full retirement age, Social Security will deduct $1 in benefits for every $2 you earn above the annual limit. For 2021, that limit is $18,960. In the year you reach full retirement age, Social Security will deduct $1 in benefits for every $3 you earn above a different limit. In 2021, this limit on your earnings is $50,520. Social Security will only count your earnings up to the month before you reach your full retirement age, not your earnings for the entire year. Please refer to the SSA pamphlet about how work affects your benefits at https://www.ssa.gov/pubs/EN-05-10069.pdf.
With regard to FICA, if you remain actively self-employed and your annual net profit from your business is more than $400, you have to pay your share of Social Security and Medicare — as both employer and employee — via the Self-Employed Contributions Act (SECA) taxes on your Federal tax return.
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