Misc Income-Subject to Social Security?

[JohnH]

Here's part of the verbaige from the Batok decision:


We believe that petitioner's installation of windows for ___ does not rise to the level of a trade or business. Petitioner's activity, although engaged in for profit, was neither continuous nor regular. Petitioner had never installed windows prior thereto nor at any time thereafter. Rather, petitioner's activity was a "one-time job". Sloan v. Commissioner [Dec. 44,879(M)], T.C. Memo. 1988-294. Accordingly, petitioners are not liable for self-employment tax on the compensation received from ____.

[taxmom34]

closing this loophole

this is a big loophole that i think should be addressed. if a person participates physically or mentally it is work and should be subject to SE . how else are we going to put money back into that system and if they won't lift the maximum income subject to SS?

[DaveO]

The problem with lifting the wage base is that the cost to benefit ratio is already a bell curve. If we make someone earning $1 million per year pay FICA tax on the whole amount are we willing to let them draw $250k per year in social security? If you don’t do that then it ceases to be a social insurance program and becomes simply another wealth transfer program.

I have a similar problem with the current 2% FICA tax cut. The money is made up from the general fund. This further erodes the status of SS as an insurance program and subjects it to the vagaries of the budget process like any other program.

I wanted to throw one more item on this thread. I’m sure we all have see the 1099MISC forms issued for participation in medical studies. I don’t think anyone questions that this is not self employment income. I have a client whose sole source of income is medical studies. She is married and her husband earns a normal income. She earns from $5000 to $15,000 per year doing these studies, no other income. The activity is clearly engaged in for profit and on a regular and continuous basis. Any thoughts?