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Wage Employment vs Self-Employment Briefing Paper

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It is not uncommon for Benefits Specialists to encounter individuals who receive some form of income, but who are unclear about whether or not this income counts as wages for Social Security purposes. Furthermore, in some instances, it is difficult to determine if the income a person gets is from wage employment (i.e.: an employer-employee relationship exists) or if the person is actually self-employed. This is further complicated by the fact that some businesses pay workers as if they were self-employed (i.e.: independent contractors), when, based on U.S. Department of Labor wage and hour laws, they actually meet the definition of employees. This document was written to provide a general understanding of how wage employment and self-employment differ, and how SSA decides which situation applies to a beneficiary with earned income.