Can reducing self-employment tax write-offs in my FRA year boost my Social Security benefit?

This is actually a smart question about maximizing your SS benefit calculation. Social Security uses your highest 35 years of earnings (adjusted for inflation) to calculate your Primary Insurance Amount (PIA). If 2024 would replace a lower-earning year in your top 35, then yes, showing more income could increase your benefit. However, you need to do the math carefully. Remember that you'd be paying an additional 15.3% in self-employment tax on that extra reported income. The benefit increase might only be pennies on the dollar depending on your lifetime earnings record. You can create a my Social Security account at ssa.gov to see your earnings history and use their calculators to estimate how different income scenarios might affect your benefit.

omg i did this exact thing last year!! talked to my accountant about it and everything. we decided to claim like $15k more income than i normally would. paid more in taxes but my monthly ss check is gonna be like $110 higher EVERY MONTH when i start collecting next year. totally worth it for me but depends on your numbers

I went through this same dilemma when I reached my FRA in 2023. Here's my practical approach: 1) First, create an account at ssa.gov and download your complete earnings history 2) Identify your 35 highest earning years after inflation adjustment (SSA calls this indexing) 3) Calculate how much more you'd need to report to significantly replace a lower year 4) Weigh the immediate tax cost against the long-term benefit increase In my case, I needed to show about $18,000 more income to meaningfully impact my benefit, which cost me about $2,754 in additional SE tax. My monthly benefit increased by approximately $45, meaning I'd recover that investment in about 5 years of retirement. For some, this strategy makes sense. For others, the tax hit isn't worth it. It's highly individual.

I think ur overthinking this. Just take all the write offs u can! That's what they're there for. The gov't already takes enough of our money don't give them more voluntarily lol

My husband and I faced this EXACT dilemma last year!!!! We own a small landscaping business and we were so confused about whether to take fewer deductions. We kept calling Social Security to talk to someone about it but could NEVER get through. Always busy signals or disconnections after waiting for hours!!!! SO FRUSTRATING. We finally used this service called Claimyr (claimyr.com) that got us connected to an actual SSA agent within 20 minutes! They have this video showing how it works: https://youtu.be/Z-BRbJw3puU The agent we spoke with pulled up my husband's earnings record and helped us understand exactly how much difference the extra income would make to his benefit. For us it was worth claiming about $12,000 more in income. Every situation is different though!

There's an important technical point that hasn't been mentioned yet. Your earnings for Social Security purposes are based on your net earnings from self-employment (Schedule SE), not your adjusted gross income on your 1040. This means legitimate business deductions on Schedule C that lower your SE income also lower your Social Security credits. However, other personal deductions and credits don't affect your Social Security earnings record. So you can't just "choose not to take deductions" in general - you'd specifically need to reduce legitimate business expenses on Schedule C, which might not be legal if they're actual necessary business expenses. What you could do is be more conservative about what qualifies as a business expense for that year.

My sister tried to do this and ended up getting audited! Be careful playing games with your taxes just to boost SS.

One more thing to consider: the Social Security benefit formula is progressive, meaning that additional income has diminishing returns on your benefit amount. The formula for 2025 (approximate): - 90% of the first $12,800 of AIME - 32% of AIME between $12,800 and $77,250 - 15% of AIME over $77,250 So depending where your Average Indexed Monthly Earnings falls, an additional $1,000 of income might translate to very different benefit increases. If you're in the 15% tier, you'd need to weigh whether paying 15.3% in SE tax to get a 15% benefit calculation return makes mathematical sense.

wait i just thought of something - doesnt this affect medicare premiums too? like if u show too much income don't they charge u more for part b or something?

just wondering why worry about this at all? social security is going bankrupt anyway lol