How to protect your parents if they never paid Social Security?
Wow. She really is in a pickle. Even though I can intellectualize that she ought have paid more attention to her family's finances, and assuming she wasn't complicit in her husband's obvious tax evasion, I can sympathize to some extent.  This is a great demonstration of how dangerous it is to just let your spouse handle all the finances because they understand the money stuff. Even if they pay the bills you should have at least a fundamental understanding of the taxes being paid, estate and retirement plans. So here's some practical advice based on the hole she has dug for herself: I'm not unsympathetic, but insurance of what kind? I don't know how he'd have owned a restaurant but failed to pay into the social security system. Was he paying taxes at all?  As for the 'why,' there's not enough checks and balances to make sure that nothing is done under the table. I believe 40 quarters of work would have qualified her for a benefit of some kind, but you say she didn't pay in either. Both people didn't pay into the system, either on purpose or by not understanding the need to do so. This is a sad situation. I am unsympathetic.  His mother made a conscious choice to evade taxes that would have provided her with at least a minimal security when she was too old to work.  First while as business owner she should have been paying self employment tax on the income they made through the restaurant and his other merchant activities.  Second while working in her own career selling Mary Kay and side work she should have paid her taxes on her income from that.   There is a part of me that says good on you for getting by with out getting caught.  But her ultimate failure was to plan for her future.  She should have known she would be ineligible for SSI and saved for her retirement.  Instead she choose to spend her money while benefiting from the government services that the rest of us pay taxes for.  Now we will provide her with medicaid as well as welfare benefits.  She has placed her son in the unenviable situation of having to either provide for his mother because she failed to do the minimum planning for herself or turn his back on her. He might be able to find a sympathetic prosecutor who would prosecute her for tax evasion.  The government would take care of her needs(food and housing) and she would get her medical care taken care of.  He could also move to Alaska.  The oil industry provide residents of Alaska with a stipend, there is lots of work for people willing to work hard, and the compensation for that work is pretty good and would likely put him in a position where he is able to provide care for his mother.
"Of course, doing nothing would mean that Social Security won't be able to meet its full obligations two decades from now. But it's not going bankrupt.  Bankrupt, as defined in Oxford English Dictionary: ""[U]nable to pay outstanding debts.""  Am I missing something?" The difference is, outside of a small period in the 70s, this is the first time that events are converging that will very likely make it true. Short of the emergence of an industry that can economically support us for the next 20-30 years (which is essentially one part of what saved us during the 70s, with the computer revolution), the options that exist for Social Security are:  1. Increase benefits age. 2. Decrease payouts (either by nominally decreasing them, or de facto decreasing them by not keeping pace with inflation). 3. Print the money to pay back the IOUs that are the foundation of Social Security today (resulting in massively inflated money supply and lower purchasing power of the payouts).  So while it might be true that this was discussed, because of the massive size of the system and the economic might of the United States, there was never really a threat of it actively impacting a generation until now.  That aside, the Social Security argument was only one arm of the discussion. The Gen X generation, if the economy doesn't recover, is going to be the first generation to have to figure out what retirement means when your entire generation is lacking resources to support itself (compared against the WWI generation (savings, not possible now with inflation), the Greatest Generation (pensions, which are gone), and the Baby Boomers (401k and remnants of Social Security system)). If you think that your parents' home is in danger, you might want to check what it would take to make sure their house is safe, and what the financial situation actually is. You are paying rent, there are brothers who may or may not be paying rent. We don't have the information, you have. Saving that house might be a worthwhile investment.  I assume that if you moved out, either rented or by buying a house, they wouldn't get any rent from you anymore and whatever the situation is, it would be much worse. The request for your parent's income comes from Form 8615, Tax for Certain Children Who Have Unearned Income.  I typically see this form appear as I'm doing my daughter's taxes and start to enter data from stock transactions. In other words, your earned income is your's. But if you are a dependent, or 'can be,' the flow avoids the potentially lucrative results from gifting children appreciated stock, and have them take the gain at their lower, potentially zero cap gain rate. I suggest you grab a coffee and thumb through Pub 929 Tax Rules for Children and Dependents to understand this better.  From page 14 of the linked doc - Parent's return information not available. If a child   can’t get the required information about his or her parent's   tax return, the child (or the child's legal representative)   can request the necessary information from the Internal   Revenue Service (IRS). How to request. After the end of the tax year, send a   signed, written request for the information to the Internal   Revenue Service Center where the parent's return will be   filed. (The IRS can’t process a request received before   the end of the tax year.) It also suggests that you file for an extension for the due date of your return. Include payment for the tax you expect to pay, say by plugging in $200K for parent income as an estimate.  My parents' accountant tells them I do not need it. Well, a piece of software told you that you do, and 3 people on line who collectively qualify as experts documented why. (Note, I am not full of myself. This board operates via the wisdom of crowds. Members DStanley, and Ben Miller, commented and edited to help me form a well documented response that would be tough to argue against.) If you can still work or have income to support yourself, I would wait. contrary to some media reports, Social Security has enough money to cover full benefits for a number of years to come, and there are solutions that don't involve cutting payouts. And as mentioned before it is likely you'll be grandfathered in if there are cuts. If anyone hasn't done this yet, all three companies have waived the fees. I just did it and a couple weeks ago, I set up an account with the Social Security Administration where you can get notified any time someone is trying to use your social security number. There's two-step authentication as well. Why is it OK for companies to lose all of our personal information with absolutely no penalties?  If the government fined these companies a dollar per SS number lost you bet your ass they'd start actually paying attention to security for a change. While stealing the identities of the deceased for claiming their social security benefits and so on is not new, this is the first I'd heard of someone stealing identities for the purpose of going after their tax refunds. I'd think it wouldn't be that worthwhile, considering the punishment likely if you get caught. The Employee Benefits Security Administration within the US Department of Labor is tasked with keeping track of pension and 401K programs. The even have a website to search for abandoned plans: it helps participants and others find out whether a particular plan is in the process of being, or has been, terminated and the name of the Qualified Termination Administrator (QTA) responsible for the termination.  The Employee Benefits Security Administration discuss all types of details regarding retirement programs. This document What You Should Know About Your Retirement Plan has a lot of details including this: If your former employer has gone out of business, arrangements should   have been made so a plan official remains responsible for the payment   of benefits and other plan business. If you are entitled to benefits   and are unable to contact the plan administrator, contact EBSA   electronically at askebsa.dol.gov or by calling toll free at   1-866-444-3272. There are also EBSA offices spread thought the United States "Step one: Contact the collection agency. Tell them that they have the wrong person, and the same name is just a coincidence. I would NOT give them my correct social security number, birth date, or other identifying information. This could be a total scam for the purpose of getting you to give them such personal identifying information so they can perform an identity theft. Even if it is a legitimate debt collection agency, if they are overzealous and/or incompetent, they may enter your identifying information into their records. ""Oh, you say your social security number isn't 123-45-6789, but 234-56-7890. Thank you, let me update our records. Now, sir, I see that the social security number in our records matches your social security number ..."" Step two: If they don't back off, contact a lawyer. Collection agencies work by -- call it ""intimidation"" or ""moral persuasion"", depending on your viewpoint. Years after my wife left me, she went bankrupt. A collection agency called me demanding payment of her debts before the bankruptcy went through. I noticed two things about this: One, We were divorced and I had no responsibility for her debts. Somehow they tracked down my new address and phone number, a place where she had never even lived. Why should I pay her debts? I had no legal obligation, nor did I see any moral obligation. Two, Their pitch was that she/I should pay off this debt before the bankruptcy was final. Why would anyone do that? The whole point of declaring bankruptcy is so you don't have to pay these debts. They were hoping to intimidate her into paying even though she wouldn't be legally obligated to pay. If you don't owe the money, of course there's no reason why you should pay it. If they continue to pursue you for somebody else's debt, in the U.S. you can sue them for harassment. There are all sorts of legal limits on what collection agencies are allowed to do. Actually even if they do back off, it might be worth contacting a lawyer. I suspect that asking your employer to garnish your wages without a court order, without even proof that you are responsible for this debt, is a tort that you could sue them for." What happens to a minor if the parents are missing, or incapacitated, or deceased should be planned now, and not end up a matter for the courts to decide.  You might need to sit down with a family lawyer as well as a fee based financial planner, to make sure you have addressed all the relevant details. These details would include where they would live, money, and what the money should be used for. The biggest issue I can see is that in order to have your parents protected properly, they'll have to register an interest in the property (ie, the 25%). I can't see the mortgage lender being too happy to have a second lienholder on the house for a total of 100% of the purchase price. Usually their conditions state that they'll need to be informed of other debts secured on the house and might actually have a say in that. Another way of accomplishing this is putting your parents on the house's deeds but that might also complicate matters with the lender and cause additional problems when it comes to selling the property. Not to mention that if anything bad happens to your parents, their stake in your property would be counted as one of their assets and you might find yourself in the situation where you have to come up with 25% of the property value right now or you might find that you have to sell the property to the first bidder simply because you do need the money as quickly as possible. Personally I wouldn't do it (especially without legal advice), the legal structure can be a nightmare and you'll just end up painted into a corner. What, if anything, do I need to do? Thanks! Nothing really.  Depending on what information you provided on SS-4, the IRS may come asking for payroll tax returns etc. In that case you'll have to respond describing the situation. If they don't - you won't. This is a topic you need to sit down and discuss with your parents. Income taxes probably aren't going to be a big issue, and will be refunded in April. Social Security and Medicare will not be refunded, but start you on the road to qualifying for them in the future. How much of you expenses you will now cover will be a family decision; how much of your college expenses you will be responsible for will also need to be discussed. These topics need to be understood before it is time to apply to schools in the fall of your senior year of high school. It is nice to know that you are at least thinking about saving money for your future and for emergencies. "If they allowed people to skip reporting the funds ""even though I might not intend to use this money to help my kids through college"", then children of a Billionaire would be eligible for financial aid.   In addition you might have reported all your income to the IRS, but the rest of the government isn't able to see that information."