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This question is about careers.
How does self-employment affect social security?
Self-employment affects Social Security in a number of ways. Starting with all self-employed workers must pay both employee and employer Social Security taxes.
If you take every available deduction for your self-employment when doing your taxes you reduce what you owe overall. However, it will also decrease the amount of your Social Security benefit payment in retirement.
The amount of your Social Security benefit is calculated upon the 35 years in which you earned the most money. In addition, the Social Security tax cap rate for this year, 2022, is $147,000.
Finally, when you are self-employed, your Social Security tax is based on your net income.
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