ronin
Thinks s/he gets paid by the post
- Joined
- Oct 21, 2003
- Messages
- 1,325
Had my taxes done yesterday. In talking with my tax guy, who always has one or two interesting suggestions most of which I ignore (after trying to find out how potentially illegal they are), he made the following recommendation for my wife.
Briefly, she is 11 credits shy of qualifying for SS on her own earnings record, due to her career in teaching and not contributing to SS for over 30 yrs. She will qualify as spouse since I do qualify for SS. So she'll also qualify for Medicare under me. GPO will eliminate any spousal benefit she'd otherwise get under my record.
The scheme is to show some earnings, in this case $6K per year, for 3 yrs of maybe a little less to garner those missing credits and get her to qualify on her own record. The wrinkle is that she wouldn't actually work and earn the dough, it'd be listed as self-employment income. She'd pay the income and self-employment payroll taxes on phantom income.
Here's the rationale. Even with WEP, by using the SS WEP benefit calculator she'd get around $106/mo. in today's $ ($120 in future $) at FRA of 66. I calculated the tax cost and the future potential earnings in SS benefits and got a breakeven at less than 6 yrs. The additional kicker is we contribute an amount equal to the phantom income to her Roth IRA. So there's a little bit of a tax savings potential there as well.
Morality aside, it seems to make sense financially. What do you folks think?
Briefly, she is 11 credits shy of qualifying for SS on her own earnings record, due to her career in teaching and not contributing to SS for over 30 yrs. She will qualify as spouse since I do qualify for SS. So she'll also qualify for Medicare under me. GPO will eliminate any spousal benefit she'd otherwise get under my record.
The scheme is to show some earnings, in this case $6K per year, for 3 yrs of maybe a little less to garner those missing credits and get her to qualify on her own record. The wrinkle is that she wouldn't actually work and earn the dough, it'd be listed as self-employment income. She'd pay the income and self-employment payroll taxes on phantom income.
Here's the rationale. Even with WEP, by using the SS WEP benefit calculator she'd get around $106/mo. in today's $ ($120 in future $) at FRA of 66. I calculated the tax cost and the future potential earnings in SS benefits and got a breakeven at less than 6 yrs. The additional kicker is we contribute an amount equal to the phantom income to her Roth IRA. So there's a little bit of a tax savings potential there as well.
Morality aside, it seems to make sense financially. What do you folks think?