How does Social Security know how much a person has earned?

Tom Hess: This one, we leave up to the clients and IRS. The company of the client sends in the W2s every year. The client, if they are self employed, they fill out a tax return, and they submit that to the IRS. So whether it comes in by W2 by a self-employment tax return, that information goes right to the IRS first.

Then, the IRS sends that information or makes that information available to us. So, we take that information and use it in calculating and verifying that a person is eligible for benefits. The IRS is the collection agency. They make sure that it’s there, they make sure that you get credit for it, and so you always have to go back to the IRS if your tax return got lost or whatever, you have to re-file it with them.

If you ever find out that you don’t have credit… well, we send a statement every year to show you how much credit you have got over your lifetime. If you find that there is a gap where your employer didn’t pay in your Social Security contribution for you and it’s not recorded, you can come to us, and we’ll help you get credit for that. But everything goes to the IRS, then it comes to us, and we use that information calculating.

Now, I would like to give the people a little caution as far as when they get that statement from us every year, if it doesn’t show their earnings are on there for last year, that’s not too worrisome, because it takes a while for the IRS to get all the W2s posted, and then that information will come to us. So, we’ll have earnings recorded, but not for the current year and one year into the past. Everything else should be on the record.

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