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Late Tax Return Prices The Self Employed Social Safety Advantages


late tax returns

File your tax returns actually late and it’s possible you’ll lose out on credit score for towards your Social Safety.

Betcha didn’t know there was a connection between revenue taxes and your Social Safety advantages.  This was a brand new one for me.

I’ve written usually concerning the unfavourable penalties of pushing aside submitting tax returns. However Harvard Regulation professor Keith Fogg identified one other “gotcha”:

 A self employed tax payer doesn’t get credit score for contributing to Social Safety  for the 4 quarters of the tax yr if the self tax return if filed greater than three years after it was initially due

Ouch!  You owe the tax and even in the event you pay the tax, it doesn’t rely towards your eligibility for Social Safety.

So it’s possible you’ll come up quick, not since you didn’t work, or pay the tax, however since you didn’t file a well timed return.

Submitting counts

The self employed pay each the worker and the employer’s share of Social Safety contributions on their revenue tax return.

In an effort to draw Social Safety primarily based on age, you should have contributed to the system for 40 quarters.  To qualify for Social Safety incapacity, you want 32 quarters of contributions.

When you’re self employed and your  tax returns are filed greater than 3 years late, the quarters in that tax yr don’t rely for both eligibility nor for lifetime contributions.

No refund for the tardy

Your tax refund is one other profit you lose out on when a return is first filed greater than three years after it was due.

This rule applies to all taxpayers, not simply the self-employed.  Irrespective of the scale of the refund you’d have in any other case acquired, miss the three yr statute, and you may kiss the refund goodbye.

Tax delinquencies drive chapter filings

I’m a crusader for submitting tax returns as a result of most taxes for which a tax return is filed are in the end dischargeable in chapter.  It’s a delusion which you can’t discharge taxes in chapter.

There are timing points, however the central premise is that solely taxes for which an trustworthy return has been filed are dischargeable.

So, for all these causes, file the return, even in the event you can’t pay the tax proper now.

Extra

Don’t purchase these myths about taxes and chapter

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