Skip to comments.Social Security Question
Posted on 03/16/2013 11:13:02 AM PDT by savedbygrace
I have a question about Social Security. I'm considering going part time at work and applying for Social Security.
If I keep my part time work income under the $14,700 limit, so the SS payments would not be reduced, would my Social Security receipts be included in Gross Income on my 1040?
To ask it it another way, let's says my SS payments total $12,000 for the year, and my part time work payments total $13,000.
Would my Gross Income on my 1040 the following April be $13,000, $25,000, or something in between?
I believe it would be $25,000....
Something in between. No more than 85% of social security is taxable income. It can be less. Suggest you go to the social security website and do some research.
After you reach your full retirement age, there is no limit on other earnings.
From the social security website:
You will have to pay federal taxes on your Social Security benefits if you file a federal tax return as an individual and your total income is more than $25,000. If you file a joint return, you will have to pay taxes if you and your spouse have a total income of more than $32,000.
Use the Internal Revenue Service (IRS) Notice 703 shown on the back of the Social Security Benefit Statement, SSA Form 1099, to determine if any of your benefits may be taxable.
Social Security has no authority to withhold state or local taxes from your benefit. Many states and local authorities do not tax Social Security benefits. However, you should contact your state or local taxing authority for more information.
I recommend you check with the Social Security office. If you start drawing ss before you are 66&1/2, your ss benefits will be permanently capped at the amount you can draw now.
Can you live with that? If you wait until full retirement age your benefits will be based on your earnings when you retire or reach whatever they are calling full retirement age these days. And if you wait, there is no limit to what you can earn with no penalty.
Your gross income would be $25,000. However your Adjusted Gross Income (the income you are taxed on) would be $13000 less exemptions and deductions...
Unless you have $500,000 or more in savings, SS numbers don’t add up.
You did not mention key factors:
a) are you married, does your spouse earn/collect SS ? (upon death, the survivor can select the higher check, but can only collect 1 check - not both.
b) illiac was correct:
“You will have to pay federal taxes on your Social Security benefits if you file a federal tax return as an individual and your total income is more than $25,000. If you file a joint return, you will have to pay taxes if you and your spouse have a total income of more than $32,000.”
c) your living expenses - including future medical
You’ll be collecting a retirement check - but you will be paying Federal income tax - and SS/MC deductions !
Once you start collecting a check - that caps the amount. Every year you wait to collect, the check amount goes higher. If you continue working after you start collecting, your check will go higher every year. The longer you wait to collect SS, the larger check you’ll have. If you start collecting sooner, you are stuck with a small check that is capped, you’ll have more years to collect, but it will be more difficult to survive on the small check. You need to enroll for MC when eligible, however, whether working or not - in order to ensure that you do not get excluded from the program.
Bear in mind - as inflation rises your living expenses will go up VERY MUCH in the next 10-20 years. Think double.
Most people living mostly on SS can afford any two of 1) a place to live 2) food 3) medical costs.
d) your investment assets
If you have at least $500,000 saved, you could begin to think about using a few thousand of the income from your own investments to supplement your living expenses without seeing your ‘nest egg’ depleted too quickly.
depends in which country you live- if Philippines= zero taxes
You’re gonna have to pay taxes on the total income. You can have them deduct from each check but it’s all taxable.
No limit on earnings doesn’t answer the question of whether the SS earnings are taxable. They are, along with other ‘earned income’.
Line 7 Wages, Salaries Tips 13000
Line 20a SS Benefits 12000 Taxable amount 0
Line 22 Total Income 13000
There are a lot of subtleties and quirks in the tax code. My suggestion: use TurboTax or whatever tax software you (or a friend) prefer, and put in the hypotheticals, tailored for your situation. You’ll get your answer.
You really need to address the question to Barack Obama as he holds the key to whether or not Social Security goes face down in the pond in 2016 or not.
SS is fully taxable as regular income. In the example you gave, gross income would be $25K
Just go to Home Depot and stand out there with spanish speaking folk.
Be a day laborer and get paid cash. No 1099 or W4 reporting...
The rule: take half of your Social Security and add it to your other income. If this amount exceeds $25000 ($32,000 Married Filing Joint) some of your Social Security will be taxable and included in AGI, but you'll never pay tax on more than 85% of your benefits. In your case, 1/2 Social Security + other income = $19,000 which is less than $25,000, hence none of the Social Security is taxable.
I tend to disagree. The "face down" will occur when the markets stop accepting the gushing supply of Baraqqi/Bernanke/Lew minibucks.
I don't think Obama has any control of that at all. All he can do is create money and hope it is accepted by the markets.
You are correct.
If filing single and the only other income is the $13,000 wages, none of the $12000 from Soc Sec will be taxed.
I have prepared tax returns for nearly 40 years.
Cool. I’m in my eighth year and I hereby reserve the right to freepmail you if I get stumped by something!
PS - I made $17,000 babysitting last year - I wrote it down on a single piece of paper - and I want to claim my nieces and nephews....will you do my taxes? ;)
Thank you. As far as I can tell, that is the correct solution.
I thank everyone who posted here. I appreciate it.
You bet. Glad I could help!
I wouldn’t worry about it - if you are eligible for SS, apply for it. Statistics show that waiting until 65 (or older) for higher amounts doesn’t usually pay as much in the long run as taking it early. Even if part of it is taxed, you still net more than if you’re not taking it.
I understand that. What I’m trying to determine is if my net dollars working part time and collecting SS would be at least what my net dollars are now, working full time.
So far, it looks like my net after making this move would equal my net now. I need to do some more thinking about this, and I have until the last day of September this year to make the decision for next year. (You have to apply for SS payments 3 months ahead of the first payment you want to receive, and if you ask for payments to begin later than January, then the SSA does some calculations with your income that can result in not receiving the first few SS payments.)
One of the last factors to consider is what I would do with the additional spare time. If I would merely plop down in front of my HDTV and in front of my computer, then it probably isn’t going to be helpful to me at all.
Good luck and enjoy...
And don’t forget nonfinancial factors, like dying, getting too sick to enjoy yourself, other turns of events that can keep you from enjoying yourself, like having to be a full-time caretaker, etc. etc. Don’t mean to bring up downers, but enjoy it while you can.