Self-Employment Tax

[mitousmom]

What is the name of your state? MD

A relatively newly self-employed friend paid her SE tax for 2006 when she filed her income tax return for 2006. Although she earned income throughout the year, SSA applied her self-employment earnings and tax to the last quarter of the tax year. Can she get that corrected and have the earnings/taxes applied to the quarter in which the income is earned? She says she has contacted both IRS and SSA but hasn't been apply to obtain information and help.

She tells me that she will have the same problem for tax year 2007.

I've tried researching the question on the web, but haven't been successful.

Any help will be appreciated.What is the name of your state?

[LdiJ]

Originally Posted by mitousmom

What is the name of your state? MD

A relatively newly self-employed friend paid her SE tax for 2006 when she filed her income tax return for 2006. Although she earned income throughout the year, SSA applied her self-employment earnings and tax to the last quarter of the tax year. Can she get that corrected and have the earnings/taxes applied to the quarter in which the income is earned? She says she has contacted both IRS and SSA but hasn't been apply to obtain information and help.

She tells me that she will have the same problem for tax year 2007.

I've tried researching the question on the web, but haven't been successful.

Any help will be appreciated.What is the name of your state?

Why does she feel that it matters as to which quarter of the year its credited towards?

[mitousmom]

She is trying to earn enough quarterly credits to qualify for SSA benefits. She wanted her SE earnings spread throughout the year so she could earn the maximum of four credits for the year. She thought that self employment tax was handled the same as FICA for wage earners, i.e., the individual has to earn so much per quarter to get credit for the quarter.

However, I've since learned that for self-employment tax credit you have to earn a minimum amount for the tax year and if you earn that amount, you get the full four credits for the year. She didn't earn the minimum amount for the tax year in question. However, she did report her earnings and pay the SE tax. I've suggested that she contact SSA, obtain her earnings record and see how SSA treated her SE earnings. They may have given her credit under the Optional Method of reporting taxes. See [url]http://www.ssa.gov/pubs/10022.html#work[/url].

Thanks

[tranquility]

Even though it may not help depending on the specific facts, go to:

[url]http://www.irs.gov/pub/irs-pdf/i1040sse.pdf[/url]

and go to page 4 regarding non-farm optional method and see if that would be useful.