Tax Planning/Social Security


Good morning!

I know:
One must have accumulated at least 40 tax credits to be eligible for S.S. payouts, which may be collected starting at age 62. Typically, this means the maximum of 4 tax credits per year, for a total of 10 years, in order to get to the 40 credits. Currently, I probably have 32 credits.

I'm 33 years old and considering taking a permanent position abroad, claiming tax exemption (form 2555). However, would you suggest that I continue to pay taxes on my foreign earned income until the 40 credits are reached, and THEN file form 2555? Assuming I wait until age 70 to start getting payouts, would the 40 credits be worth it? (over the past 8 years, I've made an average of around 35K/year)


Benjamin - This is a very tough question to answer, primarily because of your young age and the fact that you are not eligible to claim social security for another 29 years at the earliest, assuming the rules don't change between now and then.

Frankly, this is not really a tax question.  It is more of a retirement planning question.  There are way too many variable to deal with to give effective long-distance advice.

Sorry I couldn't be more helpful.

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As an Enrolled Agent, I am fully capable of providing tax advice as it relates to personal and business income taxes. Enrolled Agents are the only Federally licensed tax practitioners and are admitted to practice before all administrative functions of the IRS. My specialty is working with small business owners who file Schedule "C" and helping them to structure their business in such a way as to maximize as many tax advantages as possible. I also enjoy working with individuals who have both routine as well as complex tax situations. I prefer to concentrate on individuals and small business tax planning.


I have a 25 year background in financial services including tax, bookkeeping, insurance, real estate and securities. I was previously the Chief Financial Officer of a local and national franchise organization. I am currently semi-retired, but used to own (in partnership with another EA) an individual and small business financial engineering firm where I work with nearly 2,500 individuals and small business owners in nearly every state and almost every continent, assisting them in all aspects of their tax and financial well-being. I have prepared or reviewed more than 8,000 tax returns in my career.

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Enrolled Agent, Admitted to Practice Before the IRS, Accredited Tax Preparer, Fellow of National Tax Practice Institute, Certified QuickBooks ProAdvisor (1999-2011), Sleeter Group Certified QuickBooks Consultant, Life & Disability Insurance Agent License (California, Texas, Maine), Real Estate Agent License (California); Many years of continuing education in all these fields.

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