How does Social Security Disability affect me if I’m self-employed?

Some of you may be saying, “How does Social Security Disability affect me if I’m self-employed?”  Self-employed people also pay Social Security and Medicare taxes on their income up to $137,700 in 2020.  The difference is that they have to pay the whole 15.3% on their own unlike most workers who only pick up half of that amount and have their employers pay the other half.  Since self-employed people are essentially their own employers, they have to pay the whole amount.  Also, the technical name of the tax is different.  Instead of FICA, it is called SECA, which stands for the Self-Employed Contributions Act.  Self-employed workers have to figure this tax out for themselves when they file using schedule SE on form 1040. 

But what if you are both self-employed and have another job either full-time or part-time?  IF you earn less than the $137,700 cap in 2020 as a wage earner, then you have to pay FICA taxes up to the legal maximums combining both the wage earnings and your self-employment earnings. So if your first job working for someone else pays you $60,000 your employer will withhold FICA tax on these earnings.  You will be responsible for SECA tax on your self-employment income, up to $77,000.  Since Medicare has no cap, you have to pay Medicare taxes on all earned income. 

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