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Lev
Lev, Tax Advisor
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Experience:  Taxes, Immigration, Labor Relations
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Hello. I wanting to know when does the IRS credit SS work credits

Resolved Question:

Hello. I wanting to know when does the IRS credit SS work credits to the SSA.
I realize that one way is annually after a tax return is filed, but want to know if it also occurs during the year after one pays estimated self-employed tax. e.g. I paid $665 into the IRS just prior to 8/31/2011 estimated self employed tax which is 13.3% of my estimated earnings and want to know if the IRS will credit that to my SS work credit account prior to my filing my 2011 return in early 2012, in other words will they still do it in 2011?
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.

LEV :

Hi and welcome to Just Answer!
First of all - reduced self-employment tax rate 13.3% (which the regular rate is 15.3%) - is still in effect for 2011.
In additional - if you qualify - you are entitled to up to $400 Make work pay credit.
When you pay estimate taxes - there is no difference between income taxes and self-employment taxes. Only when you file your tax return and determine exact amounts of income taxes and self-employment taxes on your tax return - aftre that - the IRS reports your earnings to Social Security Administration.
In 2011, if your net earnings are $4,480 or more, you earn the yearly maximum of four credits—one credit for each $1,120 of earnings during the year.

Customer:

Okay thanks I understand the figures. Will the IRS do any credit reporting to the SSA before I file in 2012. The reason I ask is that I will have my 40 work credits when credited and old enough for benefits.

LEV :

The IRS will not reports your earnings to Social Security Administration before you file your tax return and determine exact amounts of income taxes and self-employment taxes on your tax return.
If you are eligible for social security benefits - you need to provide separate information to SSA for your last year earnings.

Customer:

Thanks. Just to clarify, you are saying the only way is for me to wait until after I file in 2012 before applying?

LEV :

You do not need to wait - you may submit your SSA application as soon as you qualify. However you would need to provide additional supporting documents about your last year earnings.

Customer:

Thanks again. Where I am getting confused is from your "last year earnings" wording. Before I paid my estimated self employed taxes last week had 38 credits from 2010. So with last week's payment I know I will have enough net income for it to give me at least 2 credits. So does that mean I can apply say this month with this payment info as a supporting document?

LEV :

Assuming you qualify based on your age - as long as you have 40 credits - you may file your application. But because SSA doesn't have information about your earnings - you need to provide it as additional attachment to your application. You also need to add a note that you sould have 40 credits on the day of your application.
Your case worker might ask for additional documents if needed.

Customer:

Thanks got it!! apprecizted

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22638
Experience: Taxes, Immigration, Labor Relations
Lev and 9 other Tax Specialists are ready to help you

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