Social Security

Don M. said:
Here's the Straight Scoop...directly from the SSA Web Site. SS is taxable depending upon how much income you have in a given year. If your annual income is above $34,000, for a Single Filer, or over $44,000 for a couple, the tax rate is 85%. If you make less than $25K (single), or $32K (married), there is no tax on SS benefits.

http://www.ssa.gov/planners/taxes.htm
Click to expand...

You mean that 85% of your benefit is taxed.... NOT that the tax RATE is 85% Right.
 
QuickSilver said:
You mean that 85% of your benefit is taxed.... NOT that the tax RATE is 85% Right.
Click to expand...

If you earn Above $44K a year, 85% of your SS is deemed taxable....at whatever percentage your overall income puts you in. For example, if your AGI (adjusted Gross Income) is between $37K and $90K for calendar year 2014, you will fall into the 25% tax bracket. This means that 25% of the 85% of SS will be taxable....roughly 20% of your SS will go to taxes.

Taxes can get quite complicated, if you have much in the way of deductions, but for most people, buying an H&R Block DVD, or going to TaxAct online, can usually simplify the process. Here's a pretty good summary of what most people will face in 2015...for tax year 2014.

http://www.tax-brackets.org/federaltaxtable
 
Don M. said:
If you earn Above $44K a year, 85% of your SS is deemed taxable....at whatever percentage your overall income puts you in. For example, if your AGI (adjusted Gross Income) is between $37K and $90K for calendar year 2014, you will fall into the 25% tax bracket. This means that 25% of the 85% of SS will be taxable....roughly 20% of your SS will go to taxes.

Taxes can get quite complicated, if you have much in the way of deductions, but for most people, buying an H&R Block DVD, or going to TaxAct online, can usually simplify the process. Here's a pretty good summary of what most people will face in 2015...for tax year 2014.

http://www.tax-brackets.org/federaltaxtable
Click to expand...

Thanks Don... that's how I understood it. I will be getting my 1st check in a few weeks, it won't affect my tax bill this year. When I have my 2014 taxes done, I will ask my accountant what how much withholding we will need for the 2015 taxes.

This year is going to be difficult enough as I've collected my 3 little pensions... I tried to have Federal tax withheld from them, but each check is too small to have it deducted, so I will have to pay up.. I already knew that and increased the withholding on my regular salary. I was able to get the State tax withheld on those pensions so that should be OK. THEN.... I took out some money to buy my car... soooooooooooooo it will be time to pay the piper on that too. My tax bill is going to suck.
 
Yeah, taxes, in retirement, can present some interesting considerations. Between Federal and State taxes, a person often has to do some "manipulation". SS doesn't hold out State income taxes, so that can present some problems. I have extra held out of my pension, IRA, etc., so that I get a nice stipend back from the IRS, which covers any money owed on my State taxes. When it's all over for the year, my taxes usually balance out to less than $100, either owed or received. It took a couple of years, after I retired, to figure out how much to have withheld, so I wouldn't get any "sticker shock" every year, and now, I just rob Peter to Pay Paul, and it comes out pretty even.
 
Don M. said:
Yeah, taxes, in retirement, can present some interesting considerations. Between Federal and State taxes, a person often has to do some "manipulation". SS doesn't hold out State income taxes, so that can present some problems. I have extra held out of my pension, IRA, etc., so that I get a nice stipend back from the IRS, which covers any money owed on my State taxes. When it's all over for the year, my taxes usually balance out to less than $100, either owed or received. It took a couple of years, after I retired, to figure out how much to have withheld, so I wouldn't get any "sticker shock" every year, and now, I just rob Peter to Pay Paul, and it comes out pretty even.
Click to expand...

Yeah.... I figure it will be a learning curve over the next few years.. I am fortunate as I live in a state that does not tax Social Security benefits.. so that's one worry I don't have... BUT they tax pensions.. so go figger. I have also gone crazy this year with charitable donations in what may be a futile attempt to balance things out a bit... We'll see..
 
SS is taxable up to 85% but does not come into play unless other income exceeds certain amounts, $25,000 for singles; $32,000 for married I think. To determine if your SS is taxable to any extent, the calculation is 1/2 of total SS plus your total income. The actual percentage that is taxable will depend on how much over the "base" limits allowed it is.
 
I'm wondering if by "total income" they mean only salary... or does that include IRA withdrawals..? Those I think are taxed at a different rate aren't they?
 
The instructions (for 2013 - I just had to redo this year for someone) read the following on the worksheet to be used in calculating how much of your SS is taxable: Combine from Form 1040, lines 7, 8a, 9a, 10 through 14, 15b, 16b 17 through 19.
I think this is pretty inclusive of all income regardless of its type.

 
QuickSilver said:
I'm wondering if by "total income" they mean only salary... or does that include IRA withdrawals..? Those I think are taxed at a different rate aren't they?
Click to expand...

It depends upon which type of IRA you have. If you have a Roth IRA, you pay taxes on the money you put in there, and the withdrawals are Not taxed. A Traditional IRA works just the opposite...the money you put in is Not taxed, but when you start drawing money out, That money is taxed, and added to your Total Income. There are pro's and con's to both types of IRA's...but the Most Important thing is To Have One...and to start contributing as early in life as possible.
 
You must log in or register to reply here.
Back
Top