Tax Help - Don't Throw That Social Security Statement Away!

I was looking over my annual Social Security statement this weekend, the one that lists yearly earnings that are credited for Social Security eligibility.

This form is more important than you realize, especially to those who are self-employed.

Most folks don't need to worry about their social security being reported, 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. Now this is 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 some cases, taxpayers will file their returns after this time period. So even though the tax is calculated in a return, and self-employment tax, and taxes are paid in full, no credit will be given 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, 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.