Can Someone Get Social Security if They Have Never Filed a Tax Return?

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Q. A person I know has not filed tax returns in over two decades due to her lack of a regular job. She takes odd jobs — just enough to survive. However, she now wishes to begin paying income tax in order to establish Social Security for herself when she retires. How is she to begin?

— A companion

A. Your friend should consult with a qualified tax preparer to review her financial history and determine whether she was required to file tax returns over the years.

Take note that even if she has only performed odd jobs, the IRS requires that all income be reported. It includes “cash earned from side jobs, barter exchanges of goods or services, awards, prizes, contest winnings, and gambling proceeds,” according to the statute.

When she meets with a tax professional, she will need to discuss whether she is considered self-employed or an employee, according to Michael Maye, a certified financial planner and certified public accountant with MJM Financial in Gillette.

“This accomplishes her goal of contributing to Social Security, including Medicare,” Maye explained.

 

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If she is self-employed, she will pay tax as both employer and employee, whereas if she is employed by someone else, the employer will pay the employer portion of payroll tax, he explained.

“While Social Security taxes are withheld from wages for W-2 employees, self-employed individuals pay them when they file their income tax returns,” Maye explained.

Additionally, an individual must have 40 Social Security credits to be eligible to collect Social Security benefits later in life. Individuals will receive one credit for every $1,510 earned in 2022, up to a maximum of four credits per year, Maye explained.

He also noted that the number of credits available to an individual who is unable to work due to serious health problems may be significantly less.

If your friend has ever been married, even if she is now divorced, she may be eligible for spousal Social Security benefits even if she does not qualify on her own earnings record, Maye explained.

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Finally, he suggests she create an account on the My Social Security website to determine whether she has already earned any credits for prior work.

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