My Social Security Earnings are Wrong!

I recently heard about someone who went to claim their Social Security at retirement and realized that the Social Security Administration (SSA) was missing several years of their earnings.  If you have earned income, you can set up an account with the SSA at any age so you can periodically log in (at least every few years) and make sure the information they have is accurate.  To ensure your Social Security earnings are correct, follow these steps:

1.      Create a My Social Security Account: Visit the Social Security Administration (SSA.gov) website and create a "my Social Security" account. This online service allows you to access your Social Security Statement, which details your earnings record and estimated benefits.

2.      Review Your Social Security Statement: Once you have access to your account, review your Social Security Statement carefully. The statement includes your earnings history, which is crucial for calculating your future benefits.

3.      Check for Discrepancies: Compare the earnings listed on your Social Security Statement with your own records, such as W-2 forms, pay stubs, and tax returns. Look for any discrepancies or missing years of earnings.

4.      Report Errors Promptly: If you find any errors or missing information, contact the SSA as soon as possible. You can correct your earnings record by providing proof of the correct earnings, such as W-2 forms, tax returns, or pay stubs.

5.      Keep Personal Records: Maintain copies of your W-2 forms, tax returns, and pay stubs for your records. These documents can be used to verify your earnings if discrepancies arise in the future.

6.      Regularly Monitor Your Account: Periodically check your "my Social Security" account to ensure that your earnings are being reported correctly over time. Doing this regularly can help catch and correct any errors early.

7.      Contact the SSA for Assistance: If you need help or have questions about your earnings record, you can contact the SSA by phone or visit your local Social Security office.

If you are self-employed, ensuring that your Social Security earnings are correct involves some additional steps, given the unique nature of self-employment income. Here’s what you need to do:

1.      File Self-Employment Tax Returns: Self-employed individuals must file an annual tax return with the IRS using Form 1040 and attach Schedule C (Profit or Loss from Business) and Schedule SE (Self-Employment Tax). These forms report your net earnings from self-employment to the IRS and the SSA.

2.      Pay Self-Employment Taxes: Self-employed individuals are responsible for paying both the employer and employee portions of Social Security and Medicare taxes. This is done through the self-employment tax, which is reported on Schedule SE.

3.      Keep Accurate Records: Maintain detailed and accurate records of your business income and expenses. This includes keeping copies of invoices, receipts, bank statements, and other financial documents. Accurate record-keeping is essential for correctly reporting your earnings.

4.      Review Your Social Security Statement: Create and log in to your "my Social Security" account on the SSA website to review your earnings record. Check that the earnings reported from your self-employment match what you have reported on your tax returns.

5.      Report Errors Promptly: If you find any discrepancies between your records and the earnings listed on your Social Security Statement, contact the SSA to correct them. Be prepared to provide documentation, such as copies of your tax returns and Schedule SE forms.

6.      Make Estimated Tax Payments: Self-employed individuals may need to make quarterly estimated tax payments to cover their income and self-employment taxes. Ensure these payments are timely and accurate to avoid penalties and ensure your earnings are correctly reported.

7.      Consult a Tax Professional: Consider working with a tax professional, especially if your self-employment income is complex. A tax professional can help you navigate the requirements and ensure that your earnings are accurately reported.

By following these steps, you can help ensure that your earnings are correctly reported to the SSA before you are ready to retire, which is crucial for accurately calculating your future Social Security benefits.  Keep in mind that if your business is showing losses, there will not be Social Security earnings or credits for those years unless you also have W2 income. If you have earnings that aren’t showing up in your report, it could be because your employer neglected to file your W2 with the SSA for that year. If you pull your report and have any questions about it, reach out and I can help walk you through it!