My wife has a hobby that brings her some income and that's her only income. The money she gets from it usually is spent on buying more tools for that hobby or for materials. Most of the time those expenses roughly balance out the income at the end of the year, so on her Schedule C we show low 4 figures income each year. For the purpose of getting social security credits for her, she'd have to have around $5000 of income to get maximum of 4 credits per year. It is easily reachable if we underreport her expenses. Yes, we'll pay income tax on that underreported amount, but that would pay off with social security benefits eventually, right?

What's the downside of doing so?

I already got 40 social security credits. Does it even make sense to bother with it for her?

  • 1
    FYI: ssa.gov/benefits/retirement/planner/…. "In 2023, you earn 1 Social Security and Medicare credit for every $1,640 in covered earnings each year. You must earn $6,560 to get the maximum 4 credits for the year." Commented Feb 23, 2023 at 2:31
  • @FranckDernoncourt, yeah, I multiplied by 3 instead of by 4 in my head.
    – n0rd
    Commented Feb 23, 2023 at 5:42

1 Answer 1


She'd be paying SECA (15.3%) on that additional income, plus whatever Fed+state taxes apply based on your joint income (or separate income if MFS). If her income is always going to be low, she may qualify to use the "Special Minimum Benefit Table", but the income requirements to get a coverage year is different (15% of the "old-law" contribution and benefit base for years after 1990).

I don't think the IRS would care much if your wife underreported expenses since they'd be getting additional tax revenue, but arguably she should report as accurately as possible.

Don't forget about spousal Social Security benefits. When you file for benefits, she can get up to 50% of your primary insurance amount (PIA). If your income is decent or high and expected to stay that way, it's likely that the spousal benefit would be greater than her own benefit.

All in all, the downsides include additional taxes now that may not be outweighed in the future by the SS benefit, the fact that she'll have your spousal benefit (meaning an even higher income hurdle for her to reach), and maybe the possibility of running afoul of the IRS or SSA (but again, they may not care at all).

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