USA Self-Employment Tax and Social Security

[ricklev]

So I am 64 and lack 3 social security credits.  I've been living in Thailand for 25 years.  This year I declared and paid self-employment tax on $5500 to hopefully pick up those 3 credits. 

 

Has anyone else done that?  I am curious how long it takes for social security and therefore Medicare to credit the quarters.  

 

I mailed in my return and it was received a month ago but I don't think it has been processed yet. 

 

 

[gamb00ler]

It's definitely a smart move on your part.  The lowest tier of SSA retirement benefit gives a great inflation protected return on the employment tax you pay to receive it.

 

Sorry I can't help with info on the time lag even though I checked my SSA record many times over the years I never paid attention to the processing time required.

 

I presume you have an online MySSA account where you can check your earnings record.

[gamb00ler]

A heads up for the OP.  If you were ever married for 10+ years and your spouse or ex-spouse has also qualified for SSA retirement benefits you can collect on her work record.  The caveat is that her benefits would have to be twice as large as yours to make it worthwhile.  As a spouse or ex-spouse you're only entitled to 50% of her benefits.  The math changes if you're planning on waiting until 70 to collect your retirement.

 

If you collect as a spouse it has no effect on their benefits.

[thailand49]

Open a account www.SSA.Gov,

Have code to send to email

Using a VPN, turn it on

S.S. online open during their business hours.

[Expat4life66]

21 hours ago, ricklev said:

So I am 64 and lack 3 social security credits.  I've been living in Thailand for 25 years.  This year I declared and paid self-employment tax on $5500 to hopefully pick up those 3 credits. 

 

Has anyone else done that?  I am curious how long it takes for social security and therefore Medicare to credit the quarters.  

 

I mailed in my return and it was received a month ago but I don't think it has been processed yet. 

 

 

Assuming you mailed a paper return to the Austin address since you reside outside the US.  The last time I mailed a paper return (pre-covid) to Austin, the processing time was about 18 weeks from when DHL showed it was signed for in Austin. 

 

Basically it is probably sitting in a plastic mail tub with all the other returns received that day and will be processed in due course.  You can also check to see when it's processed on your account on IRS.gov (using IDme if you don't want to use VPN) or if you are also getting a refund on the mobile app IRS2Go.  

 

Hope this helps

[ricklev]

1 hour ago, Expat4life66 said:

Assuming you mailed a paper return to the Austin address since you reside outside the US.  The last time I mailed a paper return (pre-covid) to Austin, the processing time was about 18 weeks from when DHL showed it was signed for in Austin. 

 

Basically it is probably sitting in a plastic mail tub with all the other returns received that day and will be processed in due course.  You can also check to see when it's processed on your account on IRS.gov (using IDme if you don't want to use VPN) or if you are also getting a refund on the mobile app IRS2Go.  

 

Hope this helps

Yes, it does help!  Thanks.  I was hoping to be able to enroll in Medicare at my 65th birthday in October, but it seems that was unrealistic.  Not a big deal.  

[ricklev]

22 hours ago, gamb00ler said:

I

OOPS!

[Smokin Joe]

24 minutes ago, ricklev said:

Yes, it does help!  Thanks.  I was hoping to be able to enroll in Medicare at my 65th birthday in October, but it seems that was unrealistic.  Not a big deal.  

 

You don't have to be drawing, or even being eligible for Social Security to sign up for medicare.

 

 

 

 

[ricklev]

1 hour ago, Smokin Joe said:

 

You don't have to be drawing, or even being eligible for Social Security to sign up for medicare.

 

 

 

 

Premium free Medicare, I mean, to be clear.  

What if I’ve worked, but not long enough?

You can still get Medicare Part A coverage, even if you don’t fully meet the work requirement of 40 credits. Here’s what you’ll pay in 2024:

• If you have 30 to 39 credits, your Part A premium will cost $278 per month.

[Smokin Joe]

40 minutes ago, ricklev said:

Premium free Medicare, I mean, to be clear.  

 

I figured you had done your homework but wanted to make sure.

[gamb00ler]

If I were you I would call the SSA @800-772-1213 and explain that you just filed 2023 taxes and earned 3 credits.  Then ask them if you sign up for Medicare before those credits are recorded will they refund any premium you paid for being short on credits.

 

I just had another idea that may help.  I don't recall if the IRS makes transcripts available immediately after processing your return.  If they do, you can use the IRS website to download an abstract of your 2023 filing and email it to Manila FBU.  The biggest problem with this idea is that in my experience Manila is incompetent for anything but plain vanilla application processing.  Even on that they screwed around on my wife's app for many months before getting off their butt. 

 

You can also trying faxing a letter and the IRS transcript to the SSA Division of International Operations in Baltimore @410-965-4648 or mail them : 6100 Wabash Ave., Baltimore, MD 21215-3757

 

I have successfully used online fax services that give you one free fax as a trial.

[ricklev]

1 hour ago, gamb00ler said:

If I were you I would call the SSA @800-772-1213 and explain that you just filed 2023 taxes and earned 3 credits.  Then ask them if you sign up for Medicare before those credits are recorded will they refund any premium you paid for being short on credits.

 

I just had another idea that may help.  I don't recall if the IRS makes transcripts available immediately after processing your return.  If they do, you can use the IRS website to download an abstract of your 2023 filing and email it to Manila FBU.  The biggest problem with this idea is that in my experience Manila is incompetent for anything but plain vanilla application processing.  Even on that they screwed around on my wife's app for many months before getting off their butt. 

 

You can also trying faxing a letter and the IRS transcript to the SSA Division of International Operations in Baltimore @410-965-4648 or mail them : 6100 Wabash Ave., Baltimore, MD 21215-3757

 

I have successfully used online fax services that give you one free fax as a trial.

Thanks for your suggestions.  I will just wait and let the system progress as I have Thai insurance and was just hoping for Medicare next time I travel to the USA which won't be for another year or so probably.

[ThaiSpaceNeedle]

OP, I am in a similar situation. 52 years old, in Thailand about 27 years, & short 3 credits. I tried paying tax on about $2,500 of self-employment income last year and did NOT receive a credit. I checked online. This year, I bumped it up to about $4,000 and they received my check, but I haven't seen any additional credits yet. I will check again in a month or so and will be following this post in hopes of good news.

[ricklev]

Just now, ThaiSpaceNeedle said:

OP, I am in a similar situation. 52 years old, in Thailand about 27 years, & short 3 credits. I tried paying tax on about $2,500 of self-employment income last year and did NOT receive a credit. I checked online. This year, I bumped it up to about $4,000 and they received my check, but I haven't seen any additional credits yet. I will check again in a month or so and will be following this post in hopes of good news.

Oh, that is worrisome!  Hope it works out for both of us.   

[gamb00ler]

Just now, ricklev said:

Thanks for your suggestions.  I will just wait and let the system progress as I have Thai insurance and was just hoping for Medicare next time I travel to the USA which won't be for another year or so probably.

I thought if there is a gap in your Medicare coverage they start to apply a permanent penalty of 10% for each year without coverage.  I'm not sure what happens for gaps less than a 12 months.  If you do call the 800# ask them about the penalty.

[gamb00ler]

22 minutes ago, ThaiSpaceNeedle said:

OP, I am in a similar situation. 52 years old, in Thailand about 27 years, & short 3 credits. I tried paying tax on about $2,500 of self-employment income last year and did NOT receive a credit. I checked online. This year, I bumped it up to about $4,000 and they received my check, but I haven't seen any additional credits yet. I will check again in a month or so and will be following this post in hopes of good news.

I suggest you contact the SSA office that services the area where you live or call the 800#.  After such a long gap in earnings they may request some documentation proving your self-employment.

 

If you have an online IRS account, log in and verify your transcript's accuracy.  It seem communication between IRS<-->SSA is not perfect as a year of earnings was lost for my wife and myself.  We had to file an SSA-561 form for each of us to get the earnings recorded.  Her's has been updated but mine has not.

[JohnnyBD]

43 minutes ago, gamb00ler said:

I suggest you contact the SSA office that services the area where you live or call the 800#.  After such a long gap in earnings they may request some documentation proving your self-employment.

 

If you have an online IRS account, log in and verify your transcript's accuracy.  It seem communication between IRS<-->SSA is not perfect as a year of earnings was lost for my wife and myself.  We had to file an SSA-561 form for each of us to get the earnings recorded.  Her's has been updated but mine has not.

I read where there is a minimum amount needed, it's called "substantial earnings" test to qualify for credits. And, I believe it increases every year, so you have to be above that amount to earn the credits. Can probably google it without calling SSA. Just a suggestion.

[placnx]

10 hours ago, ricklev said:

Premium free Medicare, I mean, to be clear.  

What if I’ve worked, but not long enough?

You can still get Medicare Part A coverage, even if you don’t fully meet the work requirement of 40 credits. Here’s what you’ll pay in 2024:

• If you have 30 to 39 credits, your Part A premium will cost $278 per month.

I looked into Medicare, but living in Thailand officially means that I am ineligible. Maybe you have to live in the US for 5 years before applying.

[ricklev]

8 hours ago, placnx said:

I looked into Medicare, but living in Thailand officially means that I am ineligible. Maybe you have to live in the US for 5 years before applying.

You are eligible for Medicare if you are a US citizen and over 65, however it does not cover you in Thailand.  It is free if you have accrued the 40 SS quarters.  The 5 year rule is for green card holders. 

[gamb00ler]

4 hours ago, ricklev said:

You are eligible for Medicare if you are a US citizen and over 65, however it does not cover you in Thailand.  It is free if you have accrued the 40 SS quarters.  The 5 year rule is for green card holders. 

I didn't recall any rule about green card holders in regard to eligibility for Medicare coverage.  The rule you gave above only applies to Medicare applicants that are required to pay a premium for part A coverage.  Permanent residents that have 40 credits are not subject to that rule.

[ricklev]

12 minutes ago, gamb00ler said:

I didn't recall any rule about green card holders in regard to eligibility for Medicare coverage.  The rule you gave above only applies to Medicare applicants that are required to pay a premium for part A coverage.  Permanent residents that have 40 credits are not subject to that rule.

Actually I am not sure about the residency requirement for green card holders.  A little too technical for me.

[gamb00ler]

On 6/21/2024 at 5:38 PM, JohnnyBD said:

I read where there is a minimum amount needed, it's called "substantial earnings" test to qualify for credits. And, I believe it increases every year, so you have to be above that amount to earn the credits. Can probably google it without calling SSA. Just a suggestion.

The only circumstances where SSA has a "substantial earnings" requirement is for reducing the impact of the WEP (Windfall Elimination Provision) on a person's retirement benefit.  A very small percentage of those receiving SSA benefits are impacted by WEP.... unfortunately I'm one of them.

 

To earn a single credit for 2024 requires income of $1,730.  That figure rises every year... it was $1,640 for 2023.  I earned 1 credit in 2020 on income of just over $1,700 which was the year COVID shutdowns led to my retirement.

[ThaiSpaceNeedle]

On 6/22/2024 at 8:46 PM, gamb00ler said:

The only circumstances where SSA has a "substantial earnings" requirement is for reducing the impact of the WEP (Windfall Elimination Provision) on a person's retirement benefit.  A very small percentage of those receiving SSA benefits are impacted by WEP.... unfortunately I'm one of them.

 

To earn a single credit for 2024 requires income of $1,730.  That figure rises every year... it was $1,640 for 2023.  I earned 1 credit in 2020 on income of just over $1,700 which was the year COVID shutdowns led to my retirement.

Hello gamb00ler,

 

I hope you don't mind a question or two, and feel free to respond at your convenience. When you earned 1 credit in 2020 from just over $1,700, was it self-employment work on Schedule SE? If so, did you need to provide any additional documentation to prove the source of income (receipts, pay stubes, etc.)? I have been trying to gain 3 more credits from self-employment work (Schedule SE). I used TaxSlayer online to prepare my return, but I did not see anywhere asking for additional paperwork, and I did not receive a credit last year from a couple thousand dollars income. I don't think this matters, but I am 'married filing-separately' (Thai wife), and I need to mail in my return by post as my wife does not have a SSN. Thanks in advance for the information.

[ThaiSpaceNeedle]

On 6/20/2024 at 11:39 AM, ricklev said:

So I am 64 and lack 3 social security credits.  I've been living in Thailand for 25 years.  This year I declared and paid self-employment tax on $5500 to hopefully pick up those 3 credits. 

 

Has anyone else done that?  I am curious how long it takes for social security and therefore Medicare to credit the quarters.  

 

I mailed in my return and it was received a month ago but I don't think it has been processed yet. 

 

 

Hello again ricklev,

 

When you declared the $5,500, was it self-employment work on Schedule SE? If so, did you need to provide any additional documentation to prove the source of income (receipts, pay stubes, etc.)? I used TaxSlayer online to prepare my return, but I did not see anywhere asking for additional paperwork, though I have evidence through weekly PayPal deposits. I don't think this matters, but I am 'married filing-separately' (Thai wife), and I need to mail in my return by post as my wife does not have a SSN. Also, I just checked my SSA account, and it still says I am at 37 credits, but it says 'not yet recorded' for my earnings in 2023. Hopefully, that will change in the near future. Thanks in advance for the information.

[ricklev]

2 hours ago, ThaiSpaceNeedle said:

Hello again ricklev,

 

When you declared the $5,500, was it self-employment work on Schedule SE? If so, did you need to provide any additional documentation to prove the source of income (receipts, pay stubes, etc.)? I used TaxSlayer online to prepare my return, but I did not see anywhere asking for additional paperwork, though I have evidence through weekly PayPal deposits. I don't think this matters, but I am 'married filing-separately' (Thai wife), and I need to mail in my return by post as my wife does not have a SSN. Also, I just checked my SSA account, and it still says I am at 37 credits, but it says 'not yet recorded' for my earnings in 2023. Hopefully, that will change in the near future. Thanks in advance for the information.

Yes, it was for self-employment using Schedule SE.  I did not submit any documentation and none is needed.  Even if you were living in the USA you might receive income without the employer filing a 1099 form so it is not required.  I hope it works out.  

[placnx]

On 6/22/2024 at 11:33 AM, gamb00ler said:

I didn't recall any rule about green card holders in regard to eligibility for Medicare coverage.  The rule you gave above only applies to Medicare applicants that are required to pay a premium for part A coverage.  Permanent residents that have 40 credits are not subject to that rule.

I looked into Medicare at least 10 years ago. For me I understood that I would have to live in the US 5 years before I could qualify. I have been a non-resident of the US since 2004, and I never accumulated the 40 credits, so I when I looked at this I would have had to pay around $400 per month, probably for Part A. Maybe there was an assumption in the guidelines that a person in my situation was not a US citizen, just a green card holder. Perhaps the law was written based on this assumption, but I have no time to investigate this dead end.

[gamb00ler]

22 hours ago, ThaiSpaceNeedle said:

Hello gamb00ler,

 

I hope you don't mind a question or two, and feel free to respond at your convenience. When you earned 1 credit in 2020 from just over $1,700, was it self-employment work on Schedule SE? If so, did you need to provide any additional documentation to prove the source of income (receipts, pay stubes, etc.)? I have been trying to gain 3 more credits from self-employment work (Schedule SE). I used TaxSlayer online to prepare my return, but I did not see anywhere asking for additional paperwork, and I did not receive a credit last year from a couple thousand dollars income. I don't think this matters, but I am 'married filing-separately' (Thai wife), and I need to mail in my return by post as my wife does not have a SSN. Thanks in advance for the information.

I filed as a professional gambler for 20 years.  My tax return was very similar to what a sole proprietor of a small business would submit.  Yes, I declare my self-employment income on Schedule SE.  The IRS has never asked for any documentation but that may be because I often received a W-2G from the casino when winning a larger sum either in cash or cheque.  A W-2G is only issued by an authorized gambling establishment and only notifies the government of a payment but does not prove income.  You may want to consider getting someone to issue a 1099 to you as proof of payment for some service/product.  I know very little about that process.

 

I hope you're successful in gaining your 3 credits.

[Presnock]

On 6/21/2024 at 10:27 PM, placnx said:

I looked into Medicare, but living in Thailand officially means that I am ineligible. Maybe you have to live in the US for 5 years before applying.

Yeah and medicare coverage outside the US and its territories is not allowed - have to get some additional coverage even if travelling outside the US. Nope and I have Medicare A free as I am a US govt retiree but it is useless here in Thailand.

[Dan O]

On 6/21/2024 at 12:14 PM, ricklev said:

Premium free Medicare, I mean, to be clear.  

What if I’ve worked, but not long enough?

You can still get Medicare Part A coverage, even if you don’t fully meet the work requirement of 40 credits. Here’s what you’ll pay in 2024:

• If you have 30 to 39 credits, your Part A premium will cost $278 per month.

there is no Premium Free Medicare. Its deducted from your SS benefit payment if you receive SS if not you pay direct yourself

[ricklev]

12 minutes ago, Dan O said:

there is no Premium Free Medicare. Its deducted from your SS benefit payment if you receive SS if not you pay direct yourself

I think you are thinking of Medicare Part B.