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My dad (58 years old) recently received US Green Card. He is working now as an independent contractor (truck driver) in Pennsylvania state and gets 1099 form at the end of the year. CPA office, where all our family does taxes, deducts a static amount of $2000 out of his yearly income (which is around 50K-55K) towards IRS.

Once retired, what's the monthly pension amount he can consider to receive? What can be done to increase this amount?How about asking CPA office to deduct more? Thanks for your valuable opinions.

Addition: The reason I asked this question is one of my friend's mother came to US on the approved Green Card at the age of 54, and for the next 5 year has worked as a weekend speaker on one of the Christian radio. She was not getting paid so well for the job, but after retire, she is having around $650 pension monthly payments. Assumption: you don't have to work too long to get a pension payments in the country.

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    Your terms are confusing (or I'm misinterpreting them). If "towards IRS" means "towards an IRA", then there is no defined benefit amount (IRAs are not the same as pensions). the amount of income and/or growth will be entirely dependent on what investments he has in the IRA. – D Stanley Apr 27 '18 at 19:07
  • @DStanley No, I literally meant to IRS(Internal Revenue Service). Isn't the IRS who later define pension amount based on the paid taxes? – Tired Of Trading Apr 27 '18 at 19:09
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    Your dad must have been a permanent resident of the US for at least 5 years in order to be qualified to apply for naturalization as a US citizen. What was he working on then? Was Social Security tax withheld from his income during those years, or was he self-employed during that time too? In the US, there is no national pension scheme. There are Social Security benefits, but those will be small if your father began paying Social Security taxes fairly recently. – Dilip Sarwate Apr 27 '18 at 19:14
  • @DilipSarwate Apologies, I edited the question. Dad actually granted Green Card, not naturalized. – Tired Of Trading Apr 27 '18 at 19:18
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    @DilipSarwate you don't have to be a citizen to get Social Security retirement benefits, you just need the 10 years of US employment (with an employer/self employment that withholds SS). This individual should be eligible if they work until they are 68 OR earlier if they come from a country that has a totalization agreement with the US and they paid into that country's SS equivalent. – CactusCake Apr 27 '18 at 20:20
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Green Card holders are eligible for social security benefits if they earn 40 Social Security credits (this is a requirement for citizens too), at most you can earn 4 per year, so need a minimum of 10 years working to qualify.

He'll pay federal income tax and, since an independent contractor, self-employment tax to the IRS, self-employment tax covers Medicare and social security.

The main things he can do to increase social security benefits are earning more money and delaying retirement (it's not an investment vehicle that you can throw more money at). To invest in retirement he should probably open a SIMPLE IRA or similar.

There are calculators to estimate Social Security benefit, the SSA's Quick Calculator doesn't handle the scenario in question very well because it errors if there aren't 40 credits by minimum drawing age.

  • so there is no simple formula that calculates Social Security pension amount based on the paid taxes correct? Better to open an IRA account and deduct in it... – Tired Of Trading Apr 27 '18 at 20:29
  • in 10 years he will be a citizen. So no need to fight for those 40 credits? – Tired Of Trading Apr 27 '18 at 20:32
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    @TiredOfProgramming Updated to address, there are calculators for social security benefits (not a pension plan) and the 40 credits is a requirement for citizens too. – Hart CO Apr 27 '18 at 21:09
  • @TiredOfProgramming: There is a formula, but it is not simple. Go to the Social Security Administration web site, and you will find a number of calculators: ssa.gov/planners/calculators – jamesqf Apr 28 '18 at 3:16

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