Follow
Share

What is the effect on your social security retirement income when you leave your job to care for someone. Do you get penalized for the years you work as a caregiver rather than a paid position?

This question has been closed for answers. Ask a New Question.
pinenuts, I am not sure that I understand the question.

We pay taxes on the money we bring in, through earnings or dividends, etc. If the siblings are not pitching in and not getting paid, what would be taxed?

I don't think it makes any difference as far as taxes go, but in this hypothetical situation, are the siblings trying to decide what to pay the caregiver out of their parent's assets or out of their own bank accounts?
Helpful Answer (0)
Report

You ask what is the effect on your social security? Non-working has a profound effect on your ss benefit. I was a stay at home mom for several years and now I am not getting very much benefit. My advice to you is to keep working and not be a caregiver. If you do become a caregiver, you must insist on being paid and pay your taxes etc. so that you can get a benefit. Been there done that.
Helpful Answer (0)
Report

@Jeannegibbs - thanks for answering my questions! I have another hypothetical one: Ok suppose the caregiver should pay quarterly taxes if the siblings pay her/him. ...Then don't the siblings owe the same taxes for the free work of their sibling if they do not pitch in?
Helpful Answer (0)
Report

In that case I would say the the caregiver should be considered self-employed, and pay taxes, including SS, on income. To match the former income, the base wage should be somewhat higher (about 6%) because self-employment taxes are higher than what an employer would withhold. (The employee pays both the employee and employer portion when he or she is self-employed.)

This would put the caregiver in the status as if she or he continued employment, as far as SS retirement funds go.
Helpful Answer (1)
Report

So say you were deciding among siblings how to compensate the caregiver for their common parent. It would be reasonable to compensate them not just for lost wages, but also for future lost retirement income... What do you think?
Helpful Answer (0)
Report

Once you have worked and paid SS taxes for 40 quarters, you will be eligible for SS at retirement age. The amount you get will depend on your lifetime earnings (that you have paid SS taxes on).

If quitting your job results in not meeting the 40 quarter requirement, you won't get any SS benefits at retirement age.

Quitting your job will result in lower lifetime earnings and therefore lower SS payments once you retire.
Helpful Answer (1)
Report

Social Security "retirement" is based on your work history (I'm sure it's some complicated formula). Without checking to be precise (someone will surely correct me, where I'm wrong), you need to have contributed to SS for a minimum of 40 quarters (either through self-employment or taken from your pay check), cumulative. It *used* to be that at least one quarter had to have been within the ten years prior to when you start collecting it. Not sure that's still true.
Helpful Answer (1)
Report

This question has been closed for answers. Ask a New Question.