Retro Self-Employment Tax

by David CPA
(Illinois)

I'm trying to help a priest that speaks mostly Spanish (and I speak mostly English). He is paid as exempt from SS tax (via a W-2) and wants to voluntarily contribute SS tax. He has only 14 credits and needs to get to 40. He had me file an amended 2005 return to pay his SE tax for that year (to get 4 more credits). Now, we are going to amend 2006 (then 2007, and so on). I'm a bit lost on this, but here are my questions.

Is it okay to do this? I think the IRS agent said okay on the phone.

Are these payments considered late (because they are "voluntary").

The priest made no mention of housing allowance or any of that and has modest wages. Hopefully we are okay with submitting the payments.

I just want to avoid the situation where I'm trying to help this gentleman and then he doesn't qualify for social security. The language barrier makes it tough (but thankfully we had a bilingual person from SS today).

Where are the best references for this situation - specifically, where can you learn about "voluntary" SS tax contributions.

Sincerely,

David

CPA - Illinois

Answer

Not knowing his exact citizenship, I cannot comment on his eligibility, but if he is eligible for Social Security payments and he has not filed an approved Form 4361 with the IRS, you should be able to do exactly what you are doing.

A good resource is anything written by Richard R. Hammar, J.D., LL.M., CPA or Dan Busby, CPA. Those two guys really know their stuff :-)



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