Collecting Social Security and Medicare if you haven't paid taxes

[progree]

14. I know two single Moms (both having one child). Both self-employed. One paid into the system

while the other did it "off the books". (No, they are not a "couple" ).

The one that did it by the book and filed income taxes each year got a huge huge "refund" (despite not paying anything in during the year via withholding or estimated taxes), because she was a low-income single mom, and the child tax credit and especially the earned income tax credit are in effect huge negative income taxes. And part of what would be that refund they automatically paid her Social Security taxes off of that, and still she got like $3,000 after the Social Security deductions. So by being "on the books", her Social Security is taken care of and she gets $thousands back each year. Oh, and about $1,000 back from Minnesota -- again after having paid nothing in.

The one that did it off the grid -- she has missed out on all that, plain and simple. And she will be in the same boat as your friend when she gets old.

I think though for the last several years she has been working at a regular salaried job that would be withholding and all that, so she may be well on her way to getting her 40 quarters of work credits.