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question about Earning Social Security credits & Tax Filing
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quil...@gmail.com
Sep 5, 2015, 10:01:24 AM9/5/15
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I am now 45 years old, and I wanted to find out if during the last number of years I may have been missing out on getting more Social Security credits because of the way I am filing my taxes. I live in New York State, I am married, self-employed (all my jobs are either cash or via 1099), and in addition, I trade stocks for myself. My wife has a regular W-2 income and we file jointly.
So my initial question is this: If I show a $2K loss for my business (Schedule C) while a gain for my stock transactions (let's say +$40K for the year), do I still get any Social Security credit(s) on my $38K earned? Or is it then better to show some kind of a gain for my business/Schedule C, so I can receive more credits? I can always show less business deductions in order to get my Schedule C into a positive number.
I have read on the official Social Security website
http://www.ssa.gov/planners/credits.html#&a0=0
that:
"The amount of earnings it takes to earn a credit has changed since 1978. In the year 2015, you must earn $1,220 in covered earnings to get one Social Security or Medicare work credit and $4,880 to get the maximum four credits for the year"
So my final question is: Does it matter if I "earn" money via stocks trades or my self-employed business?
Thanks everyone for the help!
--
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So my initial question is this: If I show a $2K loss for my business (Schedule C) while a gain for my stock transactions (let's say +$40K for the year), do I still get any Social Security credit(s) on my $38K earned? Or is it then better to show some kind of a gain for my business/Schedule C, so I can receive more credits? I can always show less business deductions in order to get my Schedule C into a positive number.
I have read on the official Social Security website
http://www.ssa.gov/planners/credits.html#&a0=0
that:
"The amount of earnings it takes to earn a credit has changed since 1978. In the year 2015, you must earn $1,220 in covered earnings to get one Social Security or Medicare work credit and $4,880 to get the maximum four credits for the year"
So my final question is: Does it matter if I "earn" money via stocks trades or my self-employed business?
Thanks everyone for the help!
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
John Levine
Sep 5, 2015, 10:45:03 AM9/5/15
to
>So my initial question is this: If I show a $2K loss for my business (Schedule C) while a gain for my stock
>transactions (let's say +$40K for the year), do I still get any Social Security credit(s) on my $38K earned?
No. You get credits on work-related income. The easiest way to tell
>transactions (let's say +$40K for the year), do I still get any Social Security credit(s) on my $38K earned?
is if is subject to FICA, it's work-related. For the tedious details,
see:
http://www.ssa.gov/OP_Home/ssact/title02/0210.htm
>So my final question is: Does it matter if I "earn" money via stocks trades or my self-employed business?
count toward your SS account. Unless you're planning to die before
you turn 70, you're probably better off increasing your SS credits.
Mark Bole
Sep 5, 2015, 5:01:24 PM9/5/15
to
On 2015-09-05 06:55, quil...@gmail.com wrote:
[...]
You might be missing the big picture. SS "credits" merely establish
whether you are entitled to any benefits at all. Generally a worker
needs 40 credits (10 years of full time work) to be eligible for SS when
they retire. More credits than that gets you zero additional benefit.
Since your spouse is earning W-2 wages, if you remain married for at
least ten years (and don't in the future re-marry someone else), you may
well be eligible for a spousal benefit regardless of your own credits,
as long as the spouse is eligible.
You are on tenuous ground, for both tax law and financial planning, if
you are deliberately understating your deductions on Schedule C. Also,
if you show losses on your Schedule C for more than two years out of
every five, it's highly likely you actually have a hobby rather than a
business and should not be deducting any net loss at all.
What you probably should be asking is whether you are maximizing your
eventual monthly benefit. That is a much more complicated topic, which
takes into account your annual SS earnings (up to the limit, which is
usually adjusted for inflation each year) for the highest 35 years of
earnings on your record. This too includes an inflation adjustment, as
wages 35 years ago obviously were lower on average than they are today.
Have you signed into your personal SSA account yet? You can get a
lifetime earnings statement, a confirmation of whether you have already
earned the 40 credits, as well as a projection of your future benefits.
[note: all my comments about SS benefits here are from memory, but
SSA.gov web site has a wealth of info for almost any question you have].
--
Mark Bole, EA
http://markboletax.com
[...]
>
> "The amount of earnings it takes to earn a credit has changed since 1978. In the year 2015, you must earn $1,220 in covered earnings to get one Social Security or Medicare work credit and $4,880 to get the maximum four credits for the year"
>
[...]
> "The amount of earnings it takes to earn a credit has changed since 1978. In the year 2015, you must earn $1,220 in covered earnings to get one Social Security or Medicare work credit and $4,880 to get the maximum four credits for the year"
>
You might be missing the big picture. SS "credits" merely establish
whether you are entitled to any benefits at all. Generally a worker
needs 40 credits (10 years of full time work) to be eligible for SS when
they retire. More credits than that gets you zero additional benefit.
Since your spouse is earning W-2 wages, if you remain married for at
least ten years (and don't in the future re-marry someone else), you may
well be eligible for a spousal benefit regardless of your own credits,
as long as the spouse is eligible.
You are on tenuous ground, for both tax law and financial planning, if
you are deliberately understating your deductions on Schedule C. Also,
if you show losses on your Schedule C for more than two years out of
every five, it's highly likely you actually have a hobby rather than a
business and should not be deducting any net loss at all.
What you probably should be asking is whether you are maximizing your
eventual monthly benefit. That is a much more complicated topic, which
takes into account your annual SS earnings (up to the limit, which is
usually adjusted for inflation each year) for the highest 35 years of
earnings on your record. This too includes an inflation adjustment, as
wages 35 years ago obviously were lower on average than they are today.
Have you signed into your personal SSA account yet? You can get a
lifetime earnings statement, a confirmation of whether you have already
earned the 40 credits, as well as a projection of your future benefits.
[note: all my comments about SS benefits here are from memory, but
SSA.gov web site has a wealth of info for almost any question you have].
--
Mark Bole, EA
http://markboletax.com
taxed and spent
Sep 5, 2015, 8:45:04 PM9/5/15
to
"Mark Bole" <ma...@pacbell.net> wrote in message
news:msfkvi$prv$1...@dont-email.me...
> On 2015-09-05 06:55, quil...@gmail.com wrote:
> [...]
>>
>> "The amount of earnings it takes to earn a credit has changed since 1978.
>> In the year 2015, you must earn $1,220 in covered earnings to get one
>> Social Security or Medicare work credit and $4,880 to get the maximum
>> four credits for the year"
>>
> [...]
>
> [...]
>>
>> "The amount of earnings it takes to earn a credit has changed since 1978.
>> In the year 2015, you must earn $1,220 in covered earnings to get one
>> Social Security or Medicare work credit and $4,880 to get the maximum
>> four credits for the year"
>>
> [...]
>
Also,
> if you show losses on your Schedule C for more than two years out of every
> five, it's highly likely you actually have a hobby rather than a business
> and should not be deducting any net loss at all.
"highly likely" is far too harsh. It is an issue, but is fact dependent.
> if you show losses on your Schedule C for more than two years out of every
> five, it's highly likely you actually have a hobby rather than a business
> and should not be deducting any net loss at all.
Mark Bole
Sep 5, 2015, 9:35:03 PM9/5/15
to
On 2015-09-05 17:43, taxed and spent wrote:
> "Mark Bole" <ma...@pacbell.net> wrote in message
> news:msfkvi$prv$1...@dont-email.me...
>> On 2015-09-05 06:55, quil...@gmail.com wrote:
>> [...]
>>>
>>> "The amount of earnings it takes to earn a credit has changed since 1978.
>>> In the year 2015, you must earn $1,220 in covered earnings to get one
>>> Social Security or Medicare work credit and $4,880 to get the maximum
>>> four credits for the year"
>>>
>> [...]
>>
>
>
>
> Also,
>> if you show losses on your Schedule C for more than two years out of every
>> five, it's highly likely you actually have a hobby rather than a business
>> and should not be deducting any net loss at all.
>
>
> "highly likely" is far too harsh. It is an issue, but is fact dependent.
>
Agreed, I should have used "possible" instead of "highly likely".
> "Mark Bole" <ma...@pacbell.net> wrote in message
> news:msfkvi$prv$1...@dont-email.me...
>> On 2015-09-05 06:55, quil...@gmail.com wrote:
>> [...]
>>>
>>> "The amount of earnings it takes to earn a credit has changed since 1978.
>>> In the year 2015, you must earn $1,220 in covered earnings to get one
>>> Social Security or Medicare work credit and $4,880 to get the maximum
>>> four credits for the year"
>>>
>> [...]
>>
>
>
>
> Also,
>> if you show losses on your Schedule C for more than two years out of every
>> five, it's highly likely you actually have a hobby rather than a business
>> and should not be deducting any net loss at all.
>
>
> "highly likely" is far too harsh. It is an issue, but is fact dependent.
>
Perhaps the OP can qualify as a day-trader, then the other "earnings"
could be FICA-taxed as well. <grin>
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