Will Filing For Social Security Trigger An Audit And Fines For Failure To Pay FICA Taxes?

Oct 12 2019 - 3:18pm

As the sole owner of a Sub Chapter S homebuilder for many years, I paid FICA on a salary to myself. My Sub Chapter S also accumulated a few rental properties along the way. But back in 2008 when it became impossible to sell any new construction homes, my Sub Chapter stopped paying FICA on me. I started living off rental income and also some property management fees and commissions without paying FICA. Some of the rentals were owned by the Sub Chapter S and some by me personally. In more recent years as the economy came back, I have hired a construction manager for a fee to build one spec house per year for me to sell and treated this as investment income. I have had a mix of income that was not subject to FICA and income that should have been. Now I am 70 and wondering whether applying for my SS will trigger an audit and fines for failure to pay FICA?


Theoretically, Social Security could question the accuracy of the earnings you've reported on your tax returns in past years, but based on my experience I would consider that unlikely. The IRS is the agency that has ultimate responsibility for determining what taxes you owe, and Social Security only gets involved on rare occasions. That said, our company strongly encourages everyone to file accurate tax returns and pay all appropriate taxes.

Best, Jerry