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Social Security Q&A

How to Pay Self-Employed Tax Estimate for Social Security, Medicare; More About Benefits

June 21, 2014 - Most of the questions asked in the Social Security Q&A have to do with benefits - when should you take them, how can you estimate them - and it is the same this week. There is an unusual divergence this week, however, as a self-employed person asks about how to pay the estimated tax for Social Security and Medicare.

Question:

Does Social Security have a chart for helping me determine whether to collect benefits at 62 or wait until age 66?

Answer:

Yes, we do. The chart gives you the benefit comparison for collecting Social Security at early retirement age (62) and full retirement age (66-67). The chart is located here, http://www.ssa.gov/retire2/agereduction.htm.

Full retirement age would be age 66 if you were born between 1943 and 1954.  If you were born after 1954, the full retirement age would be a little higher depending on when you were born.  It levels out at age 67 for people born 1960 and later. If age 66 is your full retirement age, then the early reduction at age 62 would be 25% so you would receive 75% of your full benefit amount at age 62.  If your full retirement age is 67, then the early reduction at age 62 is 30% and you would receive 70% of your full benefit amount at age 62. 

You might want to study the handout that SSA uses to help people determine when to start receiving benefits: http://www.socialsecurity.gov/pubs/EN-05-10147.pdf. This handout includes other areas that you should consider when determining the best time for you to start receiving your Social Security benefit.

Some areas to consider in this decision include your overall living expenses, your health, longevity among your family members, and the impact of early retirement benefits on what your surviving spouse can receive on your record.

You can obtain the amount of your retirement benefit by using our Retirement Estimator which is located at: http://www.socialsecurity.gov/retire2/estimator.htm. However, the most accurate benefit amount will be provided if you request a Social Security Statement once you have created a “my Social Security” account.  You can set up the “my Social Security” account from the Social Security website homepage - www.socialsecurity.gov.

 

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Question:

What is the difference between the disability application and the disability report? Do I have to complete both?

Answer:

Yes, you will need to complete both when you apply for disability benefits. To receive Social Security disability benefits, you must file a disability application. A disability report provides information about your current physical or mental condition, and we need this to process your disability application. You should complete a disability application, a disability report, and an authorization for release of your medical records to file a claim for disability benefits. You can do all of this online. To learn more, and to apply online, visit www.socialsecurity.gov/applyfordisability.

Question:

I am a few years away from Social Security retirement age, but I would like to get some estimates of my benefit amount at different ages. This way I can determine the best age for me to start my Social Security. Can I get this type of information on your website?

Answer:

Yes, you can. Social Security provides two top-rated online tools to help you plan for your retirement.  First is the Retirement Estimator, which gives you immediate and personalized retirement benefit estimates. The Retirement Estimator is convenient and secure, and lets you create “what if” scenarios. For instance, you can change your “stop work” dates or expected future earnings to create and compare different retirement options. If you have a few minutes, you have time to check it out at www.socialsecurity.gov/estimator.

Another great tool is your own “my Social Security” account. Here you can get instant estimates of your future benefits and verify that your earnings history is correct with your own, free “my Social Security” account. Choosing when to retire is an important decision, but it is also a personal choice and one you should carefully consider. There is no one-size-fits-all answer. If you are a young or middle-aged worker, you still have time to ponder that decision.

Planning early will make for a more comfortable retirement; therefore, learn about your options as early as possible. Here is one of the options you have when it comes to planning for Social Security retirement. If you receive benefits, and if your latest year of earnings turns out to be one of your highest years, we refigure your benefit and pay you any increase due.  For example, in December 2014, you should get an increase for your 2013 earnings if those earnings raised your benefit. The increase would be retroactive to January 2014.

Whether you want to retire at age 62, your full retirement age, or even later, you can get those corresponding estimates and learn about your options by spending a little time on our website, www.socialsecurity.gov.

Question:

How do I pay Social Security self-employment estimated tax payments?

Answer:

Self-employed individuals must pay estimated self-employment tax (Social Security and Medicare) directly to the IRS. Once you have determined your estimated tax on the Form 1040-ES along with other tax forms, there are five ways to pay.

  >> One, credit an overpayment on your 2013 return to your 2014 estimated tax.

  >> Two, send in your payment (check or money order) with a payment voucher from Form 1040-ES to the IRS.

  >> Three, pay electronically using the Electronic Federal Tax Payment System.

  >> Four, pay by electronic funds withdrawal if you are filing Form 1040 or Form 1040A electronically.

  >> Five, pay by credit or debit card using a pay-by-phone system or the Internet. See the IRS website, www.irs.gov, for more details on this subject.

 Oscar Garcia is a Public Affairs Specialist with the Social Security Administration. You can direct your questions to him at: SSA, 411 Richland Hills Drive, San Antonio, Texas, 78245. You can also email him at oscar.h.garcia@ssa.gov.

 

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