Question

During my working years I was self-employed. Years ago, I let myself get into a situation where I did not file or pay my taxes for several years. I hired an accountant and attorney to file and pay all of my back taxes and penalties. Within the past few years, I retired and started collecting my Social Security. I noticed on my records that for the taxes I paid and the amounts I was given credit for did not include some of the years I paid late. Is it possible to receive credit and payment from Social Security for those years?

Answer

For someone who is self-employed, failing to pay taxes on time for a number of years can not only result in interest and penalties paid to the IRS, but can also cause a loss of Social Security benefits, says Joseph Stenken, J.D., CLU, ChFC is Qualified Plan Counsel at McHenry Advisers.

“While the Social Security Administration (SSA) receives a taxpayers W-2 information directly, it receives information regarding self-employed taxpayers from the Internal Revenue Service (IRS) after the taxpayer has filed their tax return,” explains Stenken. “And the Social Security Act provides a time limit regarding self-employment income.”

To be considered by the SSA a taxpayer must file a tax return by three years, three months, and fifteen days after the taxable year. “For self-employment income earned in 2020, their return must be filed by April 15, 2023,” he says. “So even if a taxpayer makes a full settlement with the IRS years after not filing, they may still lose out on Social Security benefits.”

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Question

During my working years I was self-employed. Years ago, I let myself get into a situation where I did not file or pay my taxes for several years. I hired an accountant and attorney to file and pay all of my back taxes and penalties. Within the past few years, I retired and started collecting my Social Security. I noticed on my records that for the taxes I paid and the amounts I was given credit for did not include some of the years I paid late. Is it possible to receive credit and payment from Social Security for those years?

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