Single. Have checked. I will get only about $300 due to spotty, low income, and often under- the-table, work history. Hypothetically, if I could show self-employed earnings of $20,000 per year for the remaining years before retirement, could I increase benefit amount significantly? And, another idea--how many years back may I file if it is beneficial?
P. S. How much can you make before you must file taxes? I think I have made too little, but maybe not.
Thank you for your help. It is time this ostrich raised her head.
2007-12-13 17:52:59 · 7 answers · asked by worried59 2 in Business & Finance ➔ Taxes ➔ United States
Your benefit will be computed from net self-employment earnings. If you have a net profit, then since your current SS record has many years of no income or low income, your last six years of income will increase your benefit.
As for the previous years, once you have failed to pay the self-employment taxes due, after three years, three months, and 15 days, you lose the ability to have those earnings credited to your account. You could file or amend returns for the past three years now (before March 15, 2008 for 2004) and get earnings credited.
As for the filing requirement, if you are self-employed then you are required to file a tax return if your net earnings are more than $400. You could file with less earnings and get some SS credits under the "optional method". However this requires an earnings history which you may not have.
For any prior year in which you had net earnings of $400 or more, you should file that tax return. There is no statute of limitations on the IRS coming after you for past taxes on a return that was never filed.
Also, even if you start to receive your (too low for you) SS benefit, if you continue to work or earn self-employment income, you can still have those earnings credited, and your benefit will be recomputed each year.
2007-12-13 21:34:58 · answer #1 · answered by ninasgramma 7 · 1⤊ 0⤋
SSA uses the highest 35 years of employment, the numbers are adjusted somewhat for inflation, but having a $20K year fill in a $0 year or $5K year would be to your advantage.
If you actually HAVE $20K of SE income during the next years before you hope to retire, yes, it could help you. Out of the $20K of income, you'll owe $2800 of SE tax and about $1400 of income tax.
You can not, of course, fake the $20K of income.
As for fixing past years, if you underreported your income for the past 6 years by more than 25% the statute for audit purposes is still open (if you suddenly pop up with lots of income for 2004-2006, the audit team *is* going to ask questions about 2001-2003 and if they find fraud, they can go back further than that.) In terms of coming clean and getting credit over at the SSA, it's too late for 2003.
2007-12-13 18:19:05 · answer #2 · answered by Anonymous · 1⤊ 0⤋
When you work under the table, you often end up with the scraps.
With your low reported income, your ultimate monthly benefit at full retirement age will be 90% of your average indexed monthly income over 35 years. $300 per month indicates lifetime "adjusted" earnings of about $4,000 per year or $140,000. If you earned and reported $20,000 per year it would beef that up considerably. If you continue to work and not apply for benefits when you reach full retirement age, the payment is increased by 8% per year until you reach age 70.
Presuming your a full retirment age is 66, if you kept working to 70, at $20,000, you would increase your wage base by another $80,000 and your benefit amount by 32%.
2007-12-13 22:41:23 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Yes it would help some. And you are required to file taxes if you have self-employment income of $400 for the year or more.
So your saying this ostrich has lied and cheated on taxes all her life, and now realizes there's a price to be paid and wants to lie and cheat on her taxes the other way he help avoid the consequences?
2007-12-13 18:23:01 · answer #4 · answered by Judy 7 · 0⤊ 0⤋
It takes your 35 highest years, so yes, it could affect it.
Here's the calculation:
http://www.fairmark.com/retirement/socsec/pia.htm
You can make around $8,000 before you have to file.
2007-12-13 18:02:42 · answer #5 · answered by Anonymous · 0⤊ 0⤋
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2016-11-26 22:29:07 · answer #6 · answered by thorpe 4 · 0⤊ 0⤋
I believe that they use the highest three years, so that should help a lot.
2007-12-13 18:02:03 · answer #7 · answered by michaelstjohn2001 5 · 0⤊ 0⤋