Q: Does rental income count as earned income for social security work credits if owner managed the property personally?

A: Credits are earned when you work and pay Social Security taxes on the income. This is different than paying income tax. You should speak with a CPA or tax professional about making sure that you pay the tax. Those people are often trying to keep your tax bill as low as possible. You may not be required to pay the FICA tax but if you want the credits on your earnings record for future disability or retirement benefits, then let them know that so that they can advise you about paying the tax.

A: To be insured for Social Security benefits, you must have paid self-employment taxes (SECA) to earn the number of credits you need. Anyone who earns 40 credits in ten years has met the work credit requirement and is insured for full benefits. Net earnings for Social Security are your gross earnings from your business, minus your business deductions and depreciation. In 2021, if your net earnings are $5,880 or more, and you pay your SECA tax, you earn the yearly maximum of four credits — one credit for each $1,470 of earnings during the year. Some income doesn’t count for Social Security and shouldn’t be included in your net earnings, such as rentals from real estate, unless you’re a real estate dealer or regularly provide services mostly for the convenience of the occupant. See, https://www.ssa.gov/pubs/EN-05-10022.pdf and https://www.ssa.gov/OP_Home/cfr20/404/404-1575.htm.