Social Security and taxes question?

Try as I might I can't seem to understand how SS and taxes work. If my wife and I aren't at full retirment age, but collect $34K per year from SS, can we earn any extra money that won't affect our SS.

Talk to your accountant. He can advise you on what is correct. This is probably not the best place for this kind of advice.

Depends on how old you & wife are.

unfortunately, or tax code is so complex there seems to be exceptions to every exception to every rule.

I don't know what's sadder:

that an individual has to go to some kind of expert for an answer to a simple question

- OR -

In lieu of having a tax expert to answer the question - the general rule of thumb answer which usually works is: whichever option costs you more money is the correct answer.

yes; however there is a limit to how much.

This a question to ask a cpa tax accountant not a tax outfit that hirers Joe blow off street to do taxes.

dej(jed),

There are many scenarios for determining your Social Security benefits. However, if you persist long enough, you can understand the rules for your particular situation by consulting a publication that is available from the Social Security Administration.

If you want to, you can:

1. Direct your search engine to www.ssa.gov to access the Social Security website,

2. Enter the following publication number in the "Search" field in the upper right corner of the home page 05-10069

3. You will then be given an opportunity to order the publication or view it online. The publication's name is "How Work Affects Your Benefits".

It's somewhat complicated, but if you apply the information in the publication to your particular situation, you'll be able to understand the impact of earning money outside of SS.

Good luck,

Tom in TN

The limit you can earn in 2014 without it affecting what you draw is $15,480 if you are younger than age 66. Your benefits are reduced $1 for every $2 you earn above the $15,480.


This should help you:

http://www.ssa.gov/pubs/EN-05-10069.pdf

I can tell you from first hand experience if your joint income is over a certain amount, you will have to pay income tax on your SS.

You really should consult a tax expert. Otherwise you may wind up with an unpleasant surprise at tax time.

Many years ago there was a limit on your extra income up to the age of 70. Beyond that you could make all you wanted to. I'm sure that's been changed a long time ago.
A friend who hires truck drivers in the fall for harvest said those retired guys who drive for them know just what they can make over and above their SS. Said they'll have it figured right down to the hour how long they can work. Said they might leave at 2 o'clock on a Tuesday and not come back if that's when they hit their limit.

The folks here are correct, this is a question for a bonafide CPA which is different from a "tax preparer" or "enrolled agent"...although there are some pretty sharp people who carry those titles also. I am a CPA in private practice and a substantial part of my client base are retired individuals. I will tell you what I can about the TAX effects of earning additional money when on social security. I'll leave the issue of reduced benefits due to non-SS income to others. The thing that I hammer into the heads of all my clients who are approaching retirement is that they should never touch a dime of SS without picking up the phone and calling me first. My promise to them is that there will be no charge for evaluating their circumstances and making sure they are protected. I make my money doing the tax return and happily consult on the phone with regular clients.

The way that outside income affects social security for tax purposes is by making up to 85% of the social security taxable. There is a formula that is used. Without making this response too lengthy and complex, you start with adjusted gross income (AGI). There are certain things which are added to get a modified AGI...etc, etc.

To make it simpler for you, if your household income is in the low $30K and up range you should call around and find a CPA who will talk to you on the phone, quote you a price range up front and who you feel comfortable with. Make an appointment to get it evaluated properly. He will set you up with tax withholding on pensions and social security which will keep the taxes paid and allow you to enjoy your retirement without worries about quarterly tax payments, penalties and interest. That is his job. He worked hard to get there and deserves to be paid a reasonable fee for his services. Find the right guy and you will be a happy retiree.

We have one individual that delayed drawing his SS until he was 70. I hadn't realized how much that increased your monthly amount - as apposed to retiring early at age 62 (and only getting 75%) how much that decreases what you can draw. Basically you are making a bet with the government on how long you'll live. The longer you live the better off you are waiting to draw SS.

He's now earning a $80,000 a year salary while drawing 135% of his "regular" social security. He loves giving the guys working for him crap about how they are paying his second salary to be their boss.

my mom retired when she was 62, she knew how many days, hours she could work and she told her employer her quit date when she got hired. DH is turning 70 in a few weeks, so i guess he would get some kind break. but he's too retired at this point to be trudging off to work every day and also i have a honey do list as long as his arm for him anyway.

If you are still earning and your wife was the lower wage earner you might be a LOT further ahead having her retire early and you waiting until you at least reach normal retirement age. Even if you already started drawing SS you can change your mind - but that is limited to one year's worth of benefits.

http://www.schwab.com/public/schwab/nn/articles/When-Should-You-Take-Social-Security

When we sat down with a financial planner he thought I was joking when I said I planned to work until I was 70. Since I sit in an office and do mainly book work I don't see any reason why I wouldn't barring a stroke or some other disaster.

The thing is adding those 5 extra years of earnings made financial planning so much easier with so much additional income. Even if I quit adding to the nest egg the last couple years (took an easier lower paying job as a bookkeeper somewhere) not drawing on it at its peak in savings makes it last that much longer.

Meanwhile my wife being one of those poor under paid over worked teachers (with 3 months and every holiday known to mankind) gets to start drawing her state retirement at age 58. When she hears other teachers complain about low pay she can only laugh - with the same education I make more than double her salary and she readily admits I easily work double the hours doing things she wouldn't dream of trying.

Amazing how close retirement is getting.

One thing people forget when they take a lesser amount earlier too is the annual increase. If you're drawing more in the first place,the increase is more and compounds. I know two brothers who would have drawn about the same if they had both taken it at the same age. One took it at 62 though,and the other waited until 65. Right off the bat,the one who waited until 65 had larger increases and they get larger every year due to compounding.

See page 85 of publication 17 , 2013 tax guide.

Yes, depending on the amount of outside earnings you may have to pay back some of the SS you drew, the best thing to do if you find a job that you like or pays well is to curtail your SS during the time you are working then instead of owing money your monthly benefit will actually increase.

Short answer- if you're less than full retirement age (66), you lose SS benefits at the rate of $1 reduction for each $2 you earn over a certain amount, its around $15,000. If you're at or over full retirement age, you can earn as much as you want without losing any benefits, but a portion of SS will be taxable, depending on the amount you earned.

I had it explained to me one time that if you start to draw at 62, you don't draw full benefits and are limited to how much you can make on the side. If you start to draw at 65, you draw full benefits but still limited to what you can make on the side. If you start to draw at 68, you can draw full benefits but are not limited to what else you can make. I am not sure if any of this is true or been changed, but something simular would be in play I would imagine. This might not be the right place as mentioned for the answers. I would deffinately consoult a professional on this.

I retired at 67. Started drawing SS at 65, and working a the hours I wanted with no penalties. Age 65 is the breaking point. Before that you will get hit with penalties if you make over a certain amount. Just call your SS office, they will explain it all to you.
I better add, "Age 65 was the breaking point five years ago."

If you get to the point of owing money and still want to work, you can stop your SS income for the rest of the year.

That's what my old boss did.

(quoted from post at 05:48:12 04/23/14) Try as I might I can't seem to understand how SS and taxes work. If my wife and I aren't at full retirment age, but collect $34K per year from SS, can we earn any extra money that won't affect our SS.

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This is called the earnings test. My Social Security for Dummies book lists the earnings limit at $14,640 (2012) after which your SS benefit is reduced $1 for every $2 you are over the limit. The limit typically goes up every year so for 2014 it should be a little higher. Best to call social security or make a appointment and go into your local office - I have done both and they have always been very helpful.

Now here is the thing - you never lose any SS benefits. After you stop working, they will recompute your benefit to insure you get the same total payout. I did not take SS until I was 65 (could have started at 62) however I will not lose any SS money. My monthly benefit is higher because I am closer to my expected death. If I would have waited until I was 66 or 70 the monthly payments would be still higher since they have to pay out my total benefit in a fewer number of payments before I am expected to kick off. If you are working and they withhold SS money - they have to make it up when you stop working.