Checking on Your Social Security Earnings

I had a lively research project over the weekend. One of my clients was reviewing his annual Social Security statement, the one that lists yearly earnings that are credited for Social Security eligibility. And he noticed that he didn't have any income listed for several years, even though we filed all his tax returns last year. As it turns out, there's a very specific time period for reporting self-employment earnings and obtaining credit for Social Security purposes.

Now most people don't need to worry too much about this, since wages from employment are reported each year using Form W-2. Employers send the W-2s directly to the Social Security Administration, and employees get credit for their Social Security wages. Self-employed people, however, need to report their income on a Form 1040 using Schedule C; and self-employed farmers report their income on a Schedule F. And here's where the time limits come into play. To get credit for their self-employment earnings, they will need to file their tax returns within three years, three months, and fifteen days after the end of the year in which they earned their income.

In my client's particular situation, some of his returns were filed after this period. So even though we calculated his tax, and his self-employment tax, and he paid his taxes in full, he won't get credit for the tax returns that were filed after this time limit elapsed.

So if you need to file your back taxes, you will need to keep two separate time limits in mind. There's the time limit for getting credit for Social Security purposes, plus a separate 3 year time period for claiming refunds from the IRS. The difference is that the Social Security time limit expires on March 15th three years after the end of the calendar year, whereas the tax refund time limit expires on April 15th three years after the end of the calendar year.

This 3-year, 3-month, 15-day limit also applies to correcting your Social Security earnings. So one tip that applies to everyone is to check your annual Social Security statement and inform the agency of any earnings that seem to be missing before the time period has elapsed.