You don’t have to work these years consecutively and they can be a combination of years working as a family child care provider and as an employee for another business.
To pay Social Security taxes you must earn a profit of at least $400 in a year. If you have a business loss or a profit of less than $400, you won’t owe Social Security taxes for that year.
In a survey I did for my book Family Child Care Money Management and Retirement Guide 16% of family child care providers did not have a profit large enough to qualify for the work they did in the previous year.
If you do earn more than $400 profit, you should be filing IRS Form Schedule SE Self Employment Tax with your annual tax return. This form will calculate the amount you owe in Social Security taxes. The amount is then transferred onto your IRS Form 1040 and added to the federal income taxes you owe. You do not write a separate check to the Social Security office. Check your own past tax records to see that you properly filed IRS Form Schedule SE.
To see if you have qualified to receive Social Security benefits, go to the Social Security website and look up your record of earnings or call 800-772-1213.
The amount you will receive in Social Security benefits is based on the highest thirty-five years of earnings over your lifetime. When you look up your Social Security account on the Social Security website, it will show how much you have earned for each year of your life. It will also show how much you can expect to receive in Social Security benefits if you start claiming benefits as early as age 62, your full retirement age (age 65 or 66) and at age 70.
Tom Copeland – www.tomcopelandblog.com
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