Should I opt out of FICA tax?

2 Replies

I am a licensed minister working for a non-profit ministry. I have the optIon of opting out of FICA tax. As of right now I am paying It setting aside $750/month. I was wondering If I should stop paying that tax and put that money towards InvestIng In real estate. The ImplicatIons of optIng out are not having social security (which I’m not really banking on) and not having Medicare (which is what I am manly nervous about) after I retire. Would putting that money into real estate be better than paying the tax?

@Cameron Moore

We dont get this question because not all of us have that option. 

I dont know how much you know about this but let me assure you dont know.  

For 2017, if you earn at least 5200, you are credited for every four quarters for entire the entire 2017. It does not matter when you earned it( all in one month out throughout the year).  You need 40 quarters of coverage to be fully insured for SS benefits in your working life. So, if you have at least one quarter from age 21 to age 62, you are fully insured. So you can manage your quarter as you want. 

If you have the option to opt in and out, why not opt in when you meet all your credit for each quarter, and then opt out.  

But remember, some SS benefits are available to "currently" ( not necessarily fully) insured individual. Currently, insured workers are those who have at least six quarters credit out of last 13 years. 

In my personal opinion, I would not opt out.  It is a very small amount for such a comprehensive benefit and insurance you receive.  You are paying now because when you are old, you can't pay that when you retire.  

SS pays for:

Retirement, Disability, family benefits, Survivors benefits, and Medicare

This is the best Risk management. If you ever have to liquidate your RE investment for health reason, law suites...., you know you are covered at old age. 

I would not contribute to a retirement account and rather invest when you get started in the RE, but not FICA. 

@Ashish Acharya Thanks for your insight. I read something about you need at least ten years of paying into social security to receive benefits when you retire. My thought is maybe I can opt out now then get a job where I have to pay FICA tax later on. Thanks again for your thoughts. I don’t want to forget about the benefits I can receive right now through SS as well.