What Is The Best Option For My Wife And Me?

Oct 25 2016 - 4:30pm

UK born but been over here now for 22 years and my wife and I are both US and UK Citizens. Started a business all those years ago here in the States and I qualify for Medicare and full Social Security. In fact next year will be 65 and definitely will sign up for Medicare and might wait until 70 for SS.

Was given some very bad advice many years ago in as much as although my wife has worked by my side for all these years, she never paid any taxes whatsoever and on the face of it would not qualify for either of the above, which I am entitled to.

However was reading an article which states that if your spouse and myself operate a business together, she would be entitled to receive SS credits as a partner but needed to file a separate Schedule SE, even though we file a joint income tax return. Its been my stupidity in not reading up well beforehand or not really understanding Medicare and SS that I have left this so late but am hoping that my wife could indeed be able to claim on SS and Medicare, perhaps claiming on my earnings?
I am just totally ignorant on this subject.

Just not sure how to go about this as did indeed try online last year to get the ball rolling by filling out the forms on behalf of my wife and trying to claim for her but somehow ended up filling out a disability form which naturally they wrote back and said she didn't qualify.....

So is there a place I could go to in order to hire someone who specializes in this as in a SS Lawyer or could I indeed tackle this myself as I don't want to mess up again and this is obviously quite important to handle correctly as would save us a considerable amount of money with health insurance costs plus have an income coming in....



When a husband and wife run a joint business, they have the option of reporting all of the profits to one member of the couple as a sole-proprietorship, or they can form a partnership to split the profits. This is done via your tax returns, and the IRS relays what you report to the Social Security Administration. It sounds like you inadvertently chose the first route, with you as the sole proprietor.

Actually, and especially if your wife is about your age or younger, this may have been the better choice. Had you split the profits between you and your wife, you would undoubtedly be due a lower Social Security benefit rate. Probably substantially lower. And, since your benefit rate will be higher as a result of the reporting method you chose, your wife will be eligible for a higher spousal benefit rate, and a higher widow's benefit rate if you die first.

The only catch is that, since your wife is uninsured on her own record, she can't draw monthly Social Security benefits until you start drawing your benefits. However, since you are already over age 62, she will be able to receive Medicare coverage based on your record when she reaches age 65. If she is already age 65, she can file an application for Medicare benefits immediately by calling Social Security at 1-800-772-1213, or by walking into a Social Security office.

All of that said, it may still be possible for you to reverse course and ask Social Security to split your past business profits between your earnings record and your wife's earnings record. For more information on this process, refer to this reference from Social Security's program operations manual: https://secure.ssa.gov/apps10/poms.nsf/lnx/0301802334. As I stated, though, this may very well be a disadvantageous course of action. Unfortunately, there are too many variables involved for me to be able to give you advice on this option. And, I don't know if you could find an attorney with enough expertise to help you with this issue. In my experience, most of the attorneys advertising themselves as experts in Social Security matters mainly handle disability claims.

You may first want to consider running the maximization software available on this website. That will give you an analysis of your filing options based on your earnings as they were originally reported, and will include estimates of the amount of your wife's spousal benefits.

Best, Jerry