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Author: blacktreechaser Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121333  
Subject: Inflating earned income for more FICA credits ? Date: 6/29/2011 12:24 PM
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Someone is age 27 and self-employed. Main occupation is making a product and selling it directly to the customer, working out of the house, sometimes dealing only in cash. Yes, its a legal product, no drugs involved.
Self-employed income for 2010 was not enough to maximize Social Security credits. So, is it better to report a higher income on the tax return to maximize the Social Security credits? I'm assuming Social Security will still be around when this person becomes of age to collect, with no reduction in benefits.
The main disadvantage would be paying more in income taxes, but that would be a small amount. A minor disadvantage would be if there was an audit (highly unlikely) and the auditor wants to see paperwork to back up the reported earned income. However, I don't think anyone ever got in trouble for over reporting income, unless it was done for money laundering, which would not be the case here.
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