Wednesday, February 24, 2010
Improperly prepared tax returns can impact the Social Security you receive later in life.
Your site has a wealth of information, thank you.
I have a small Internet business on the side with my main job as an employee of an engineering firm. I get and file the w-2 from them and I pay that self employment tax as well. The IRS sends me a statement about what I can expect in monthly payments as a retired person and they list my taxable income amounts going back to when I was a lad.
But I have noticed that the taxable income amount they show only reflects what my employer has paid me and not the other income on the side. I file jointly with wife. I just fill out a Profit/Loss from business form and pay the total 15% for the Internet business. I feel like I'm not getting credit for this. Any thoughts?
You are welcome. Glad to provide wealth in the form of information.
You say "on the side income." By that I assume you mean your self-employed business.
I also assume that you are preparing your own tax return. I also assume the problem might lie in your tax returns.You say that you paid 15% SE Tax. But on self-employed income you must also pay income tax. Perhaps your returns were not prepared correctly.
Social Security calculations regarding how much you will get when you are old and living the sweet life of retirement are based on your income as an employee and your income from self-employment.
After April 15 take your returns to a tax pro or to H&R Block and ask if the self-employment income was handled properly. This can be done without a costly complete review of your tax returns. If the answer is yes, then take your returns to the Social Security office and get an explanation.
If your returns were not done correctly then you need to hire a tax pro and file amended returns.