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Old 11-26-2014, 04:16 PM
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Income with no Social security benefits

I am self employed and my wife has not worked most of our 37 year marriage. I have always submited our taxes as married filing jointly. For 10-12 years my wife has received some oil royalties that avg 1,200/yr. and has never recieved any income listed under her social security statement each year. These are reported on a 1099. But this year her oil royalties will be around 14,000 for the year. These will also be reported on a 1099. My question is, if I still submit our taxes jointly will she now see this income show up on her social security or should we file seperately? I don't know why she has never had a report from the social security on her income showing her oil rolalties, but I would like her to get her social security benefits from this income. She is now 58.



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Old 11-27-2014, 12:34 AM
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I am self employed and my wife has not worked most of our 37 year marriage. I have always submited our taxes as married filing jointly. For 10-12 years my wife has received some oil royalties that avg 1,200/yr. and has never recieved any income listed under her social security statement each year. These are reported on a 1099. But this year her oil royalties will be around 14,000 for the year. These will also be reported on a 1099. ========>>>>>>Royalties are generally not earned income unless they are subject to self employment tax which would be unusual.so in general I guess, aslongas you receive royalties in addition to normal income, you pay Soc Sec tax ONLY on your normal income. However, you don't pay it on royalties. They are reported on Sch Eof 1040 line 4, which is not earned income in the eyes of the IRS.BUT If you receive a 1099 form showing royalties, it doesn't automatically mean it goes on Sch E. The IRS has specific rules as to where you list the income. The IRS does require you to declare income on royalties received from operating oil, gas or mineral interests on Sch C as well as Sch SE for self-employment taxes NOT on Sch E of 1040.you can deduct certain expenses from royalties, just as you can from Sch C income. For instance, as she receives an oil royalty, she could deduct the cost of property tax on the land. Even though she has to pay self-employment Social Security tax,seca tax, I mean, she can count the royalties as earned income on your joint return. Oil & gas mineral royalties are treated as ordinary income and are taxed at your marginal highest tax rate on your joint return.
Note; According to the IRS, taxpayers can generally report royalty income on Part I of Sch E on Form 1040 , not subject to seca taxes. This section deals with supplemental income and loss. If, however, a taxpayer earns royalties from holding an operating oil, gas or mineral interest or work as a self-employed writer, inventor or artist, he must report royalty income on Sch C or Sch SE.




My question is, if I still submit our taxes jointly will she now see this income show up on her social security or should we file seperately?================>> Soc Sec stmt. does not issue tax forms they only issue a year end statement detailing your Soc Sec income for the year. You need to have worked and paid Social Security taxes for a certain length of time to get Social Security benefits. The amount of time you need to work depends on your date of birth, but no one needs more than 10 years of work 40 credits.In 2014, if your net earnings are $4.8K or more, you earn the yearly maximum of four credits .one credit for each $1.2K of earnings during the year. If your net earnings are less than $4.8K, you still may earn credit by using the optional method described later in this fact sheet.All of your earnings covered by Social Security are used to figure your Social Security benefit. So, it is important that you report all earnings up to the maximum, as required by law. If you file mfs, you need to show your spouse‚Äôs 1099 income on tax returns;aslongas your state is a community property state, then you need the income as half of it is yours.And of course, if you file MFJ, then she needs to report her 1099 gas royalty income on yur return.

I don't know why she has never had a report from the social security on her income showing her oil rolalties, but I would like her to get her social security benefits from this income. She is now 58========you, as a self-employer, must report your earnings and pay your taxes directly to IRS.You report your earnings for Social
Security when you file your federal income tax return. If your net earnings are $400 or more in a year, you must report your earnings on Sch SE.
Soc Sec statement typically lists every year you have worked and how much you earned. Sometimes your income does not get properly reported to Social Security, so It is important to notify Social Security promptly(or IRS also) - either in person, by phone or by mail - whenever a change occurs that could affect your benefits. OR you can contact the tax preparer filing your returns for more info in detail.



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