Taxes on Social Security Income: 3 Things to Know
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- Опубликовано: 19 июн 2024
- After paying FICA taxes your entire life, it may shock you to learn you owe taxes on Social Security income. Here are three things to know.
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76 years old and still giving the government a lot more than they give me. You would think after working 50+ years a person would get a break?
Same here! Sick of it!,
Sounds like time for a revolution and that you were a slave working for nothing. 4% tax increases how this country was stolen from the crown after was stolen from the indigenous population because people landed on a boat 250 years ago. You’ve been working here all your life to And now your Social Security which you are taxed on to receive income and your tax dawn to spend that income now being taxed on to receive your savings.
Said that exact thing to my sister when we we were discussing this. Never a break even after working your whole life.
Thank Ronald Reagan. He also instituted taxation of unemployment benefits
I have 359k all tax free so when I retire no tax to be taken with 4k of ss benefits due me and wife combined so glad wont have to pay a dime
In other words, the SSA is the loan shark in this arrangement. The income tax collected on the benefits is their "vig". It's utterly shameful that our government takes 12.4% of our income to put it in an account for our retirement and then does everything it can to reduce our benefit and then tax it as income.
yes, a drastic measure in 1982 to save the system. Came back 10 years later
and increased the 1982 tax to 85% of combined income?
Desperation. The next rabbit will be an increase in age to start collecting.
Unavoidably necessary.
@@tedlahm5740 What a lot of folks don't realize is the vaunted "social security lockbox" never existed. The SS tax collected went into the general revenue fund and Congress spent it on things unrelated to SS. The age increase is now irresponsibly unavoidably necessary. About 20 years ago the contributions collected still surpassed the benefits paid out.
@@ozarked2363 You forget about the US securities purchased. My understanding is that such bonds are counted as assets. Heck, when I buy a CD from a bank, some stranger is using my money to buy a house.
@@ozarked2363 Another part of that is there were baby boomers supporting the system more back over the years, now many boomers like myself are starting to retire, so the ratio of workers to retired is something like 2:1 instead of 3 or 4:1. Congress does indeed need to push back the retirement age of younger generations and also raise taxes on SS and Medicare to keep things going.
I think it’s time to make a new leader
My father made it his mission to avoid paying taxes. Tax free municipal bonds are tax exempt. 4% bond returns on a $400k investment, is $16k tax free annual income. And you maintain your assets.
Nicely done. Short, clear and to the point. Thanks.
the politicians would tax your diarrhea if they thought they could get away with it...
🤣 Don't give them any ideas!
@@PranaWealth *And constipation too*
For maybe half the population because you do realize that half the people pay no federal income tax
Most of them pay at lower rates like MIT Romney
@@TheDonnaCrosby most people don't have an effective tax rate above 10-12% when all is said and done, forget the marginal bracket entirely. For the 10 years before he ran for President, he'd actually not used millions of his charitable deductions that were allowed by the tax code, so that he'd stay in the 13+% bracket...
Would love to have seen some examples and what to look out for in the way of errors that will cost you more taxes.
Wow this is really helpful
After age 65, all taxpayers in good standing, should be exempt from income taxes!
We Senior citizens, finally reaching retirement age, need all of our available benefits to help retire safely and comfortably.
when is the best time to take social security????
You may be eligible to collect Social Security as early as 62, but waiting until age 70 yields greater benefits for most people. But at 50 you should be worth more than a million dollars. If you follow the financial planning of people like Teresa Jensen White.
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more like a good option... than sitting and waiting for soc sec.
Why is it seldom mentioned in the national discussions that the simplest way to fix SS for the future is to raise the cap on the payment level. Someone who makes less than $140,000 (roughly) is paying 100% FICA on their income, someone who make $1M is paying a pitance. (Love your videos),
@Fhaynes -- that's a great question to ask, right? We're trending deeper and deeper into the red as time goes on, however there's little motivation for politicians to make difficult decisions before there's a crisis. Don't get me started! I think this is going to become a bigger and bigger problem as more Boomers retire (since they're such a large generation, numerically). There will be fewer working people to pay into the system. It's something to be concerned about, for sure.
And they get pitance credits towards benefit also after reaching the cap.They should pay for your benefits?
Social security benefits isn't meant to pay for retirement. It's more like padding. It ensures that you don't work all your life and have absolutely nothing if you didn't invest or save for retirement.
@@PranaWealth - What about "Illegal Aliens"? How do they "Factor In" towards SS? Are they paying into the system? What gives?
@@SandfordSmytheyes as we pay for those who contribute minimally or none at all. Income disparity and greed will ultimately be the downfall of a once great country. How many trillions were given away during covid to the top companies who ended up laying off employees anyway?
It seems like there are a lot of you who are upset about these taxes on Social Security. I made this video to bring awareness to how the taxes work, but had no idea that it would bring up so much anger and frustration.
If you still work part time, do the FICA taxes paid on employment apply to the total taxes paid on social security?
Phil -- I think I understand what you're asking. So, if you're collecting Social Security while you're working, do you still have to pay FICA taxes on part-time earnings? If you're a W-2 employee, unfortunately you'll have to pay FICA taxes. If you're a 1099 employee, you'll have to deal with them when you file your taxes. Hate to be the bearer of bad news!
Chock full of information. Hope you can elaborate on Roth Conversion strategies
You’re amazing. Your explanations are simple and easy to understand. Thanks
Thank you so much for the kind words, Laurie!
I'm beyond full retirement age and work part-time as self-employed. I pay double social security because of this. Then taxed at 85% of SSI come tax time. Feel like I'm getting screwed big time.
We really do have a crazy system!
It's the other income that is causing the SS to become taxable
True. And it's hard to live just on Social Security, so much of it gets taxed.
The system is set up not for you to retire and continue to make money outside of SS! Uncle Sam and his IRS goons see this and want more. Also it hurts you even more that you are self-employed even if it's part-time. My mom's ol man retired from Ford, gets SSI, and has two properties. Had to pay 6k in taxes.
Not at all. Exactly as planned. AKA income redistribution.
Unfortunately the tax users will soon outnumber the tax payers.
Only 50% of the social security benefit is included in the combined income amount. This is an important fact. Thanks for mentioning this.
Anytime, W.S.! Thanks for watching and thanks for the great comment! 🙏
Actually up to 85% of SSI depending on your AGI.
yes, that is the 50% that the employee paid during working years.
@@remowilliams7569 Incorrect. The maximum would be 50% of your total SSI could be taxed at 85% at your AGI tax rate. You missed that 50% of your SSI can not be taxed at all. The combined income amount only factors in 50% of your total SSI income. I wish he was more clear about that. Had many instances where he could say max tax would be 50% of total SSI at 85%.
1/2 SS Included in the combined amount for a quick determine if any of your SS is taxable or not. After you or your tax software determine you have to pay a tax, then the total SS amount is used in the worksheet, determining how much, up to 85% of the total amount is taxable. The same worksheet is used on both brackets as its a progressive computation and the income brackets just serves basically as information only.
Crystal clear👍
It’s called “non-taxable income” (Roth 410K’s and Roth IRA’s) but then if it counts as part of one’s combined income in a formula to determine if you pay taxes on your social security or not, then it isn’t actually non-taxable income after all. If that’s what I’m hearing, it sucks!
No adjustment for inflation since '93 ? Time for update.
Z-Man -- there have been cost-of-living adjustments (a.k.a. "COLAs") every year. The question is whether those reflect actual inflation or not. There is some controversy, as you would expect.
Im having ssa take 7% from my ss check monthly, to help cover some of the tax
A small correction. In tier one ($32K to $44K combined income for joint filers) 50% of SS that brings combined income above $32K is taxable. Similarly 85% of SS that brings combined income above $44K is taxable. For example consider a couple with $25K non SS income and $20K of SS income. Their combined income is $35K. Since that is more than the $32K threshold 50% of the $3K of SS that pushes combined income above the $32K threshold would be taxable giving a $26.5K taxable income. However, since $26.5K is less than the standard deduction for a couple, there would be no tax due. In other words it is more complex that you make out. This is all very clear if you look at the SS security worksheet in the 1040 instructions.
That middle bracket of 50% of SS benefits to be taxed was from the bipartisan legislation that also gradually raised the age for full eligibility from 65 to 67 years. We can thank the Clinton administration for adding the 85% tax bracket (that amounted to a 75% taxable coverage increase for the highest income SS recipients).
In this situation do you have to file anyway?
76 also, getting clipped on withdrawals from annuity, which is dwindling because I can't make my monthly payments & costs on the Soc Sec amount!
For people living in KY. After 59 1/2 years of age, you can rollover to Roth up to $31.000 every year and not pay state tax.
Thanks, better to put off SS to have a bigger conversation window and then only 30 k of non Roth income? Does capital gains count against SS also?
Is VA disability payment considered non taxable income for SS tax?
Taxes on social security? Not seems like double taxing, IT IS DOUBLE TAXING!
Ginger go look at your income tax return and see how much tax you paid Most are in the 6-10% tax rate
Any guess when the 'combined income' limit might go up? 1993 is a long time ago.
I have a sibling that is 75, receives a monthly amount ( not very much) but she doesn't bother to pay any taxes. What seniors are exempt? I'm trying to figure out if she just doesn't bother or is she exempt because of her level of income. I guess I thought everyone had to submit a tax return here in California. I know another person who prefers to work under the table for cash and does not bother with paying taxes at all. Both these people live in California and are U.S. citizens. I'm a bit confused. Any insight is helpful.
So many people at my work in their 70s (some are 73, 75, 77) but still working full-time. Will a big chunk of their SS be taxed by IRS? As I recall vaguely, one of them told me that if she quit working past 70, she was going to get $3K per month SS, but since she came back to work full-time, her SS after IRS taxes, went down to under $2K! That's a lot of SS gone!
Is the income total based on net or gross? This would be important to know in my case.
Thanks for your help and let me know when you can. Also, does state retirement as a
teacher count as income when arriving at the total income? Thanks!
Dennis -- please don't consider this as "advice" per se. However, the income should be based off of your Modified AGI, so talk to your CPA about that. Your pension from the state should also count toward your AGI, so that would factor in. Hope this helps!
Can you tell me if this is right I signed up for social Security I have not worked much so I had very little. My husband of 19 yrs said I can draw off his as he took his at 62 but still works off and on. 🇺🇸 when I went to sign up this mo as I’m 62 on the 28 th they said you can no longer draw off your husband social Security ?????? Is that right. Then I called the office they said I can. When they called me on the 13 for my apt they said no and I would only be getting $791
My question is , like when you were employed and paying normal taxes, do they take out OASDI (aka social security) on you social security check ?
@IU DOG -- that should be the case for most everyone.
I retired at 62 but have been living off my 401(K) rollover to IRA ever since and draw out $18,000 (Taxes are now $400)every year but I actually only use around $12,000 to live on and am now 66 since this last April and am just hanging out to get more from SS with the 8% bump I will be getting every year from here going forward and will probably start drawing SS around age 69 and that's if I don't decide to just go all the way till 70 and get my maximum benefit because when I turn 70 I will still be drawing out that $18,000 for a couple more years on top of what ever my benefit will be.
That's my game plan so far and will stick to it unless something better comes along.
Riley, delaying those Social Security benefits is a great idea if you don't need all of the income. Sounds like you have a good plan!
Social security was a scam from the very beginning when it came into being in August 14, 1935. At that time, the minimum age for retirement payout was 65 years old. However, the average life expectancy in 1935 for men was 61.7 and 65.1 for women and most women did not work fulltime. The life expectancy dropped 4 years straight from 1935 to 1940 and for men it did not exceed 65 until 1949.
First person to receive it, lived to 100 yrs of age. :)
SS uses life-expectancy figures for working folks. Your figures are low.
It's just a big Ponzi scheme
The first thing you need to do is contact your representatives in Congress to index the thresholds.
What about the Eight different states that Do not tax Social Security and Pension plan ?(Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming - don't tax wages, salaries, dividends, interest or any sort of income. No state income tax means these states also don't tax Social Security retirement benefits, pension payments and distributions from retirement accounts.) You already paid taxes while working now that your collecting Social Security that you paid for while working .. you might want to re think if you want to participate in double dipping or move at one of the eight states that don't do double Dipping??
does AGI equal pension minus standard deduction?
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Are you talking about combined income when both ate taking socual security or of working income? What if one of a couple is entirely civil service and the other draws social security?
At 3:40 you stated to add in any "non taxable income" I don't understand why you add in non taxable income when determining if SS is taxable.
I am retired and have not yet taken my SS. Does combined income include my pension? This is my only income.
I e-mailed my congress representative what she thought about SSI being taxed when it was already taxed and if she would propose an amendment for the currently discussed stimulus bill. She provided a non-response about taxes in this proposed bill but did not even discuss about SSI taxation so do not expect any relief from Congress about this double taxation.
Timothy -- congrats on taking action here. I wanted to bring awareness to this issue by creating this video, but I'm surprised at the visceral reaction that folks are having. Fixing these entitlement programs is an extremely complicated problem. Unfortunately, the incentive structure of D.C. doesn't reward our elected representatives for tackling these kinds of issues. I'm not sure what the answer is here.
This is not governance, this is a robbery of a historic scale.
We are talking about SS and SSDI not SSI. Don't confuse your Congressperson.
There is a proposed bill to remove in stages this tax by 2033.
Here’s subject for you. Hubs and I retired and started drawing SS at 62. The first year of retirement he was able to cash in some stock options that he earned several years before retiring. During the 2nd year of retirement SS called the stock “wages” so they initiated a penalty on the amount over $19k (don’t recall the actual number but you probably know it.) We called SS and they mentioned that it might not be chargeable, and to research and appeal. Sure enough, “bonuses” earned in years prior to taking SS aren’t considered as the penalty wages. So glad we inquired about it, the sum was significant.
The penalty is for every $2 you earn over the $19 K limit, they deduct $1 of your benefit. In other words, it's 50%.
Question…. So let’s say you still make just $25k salary in joint income and yet expect another $20k in SS Benefits. Would you view your combined income as $25k (since that is your combined salary) putting you below $32k and thus making none of the $20k SS income as taxable? Then one has a standard deduction of $25k which would also make the salary clear from being taxed as well. Thus a total with combined income ($25k) and SS income of $45 not taxed? Sounded like this is what you said?
One pays social security as a tax only to be taxed on the taxable payout when returned to the initial payer. Sounds about right.
Why is my Social Security tax withheld higher than my federal tax withheld, i only had one job this year. It took half of my income text. Why, and can i change it on my w2😢.
what if social security is your only income?
A little background. Social Security used to be tax free. But other sources of retirement income were not, things like pensions and annuities. So in order to level the playing field so to speak, they introduced taxation of Social Security during Reagan’s term of office. Because your employer paid half of the FICA taxes, they set the limit on taxation at 50%. They set the thresholds for the combined income calculation very high , for the time, so that only a few rich people had to pay. They deliberately did not index the thresholds to inflation so that eventually everyone except the very poor would have to pay tax on their Social Security. In 1993, the chief actuary of the government calculated that the average person only contributes 15% of their eventual lifetime benefits so they could safely raise the taxing threshold and tax up to 85% of benefits without causing double taxation. So whether you agree with what they did or not, know that there was method in their madness. They didn’t just make this stuff up .
Another great point, John. I'm not a fan of many of the details of our system of taxation, but the rules are what they are.
I try to to avoid terms like "they", because it gives an anonymous conspiratorial tone to things. At that the time SS was facing a shortage of funds, so a bi-partisan committee was set up to thrash through the partisan solutions: increase SS taxes [Democrat] or decrease benefits [ Republican]. It was done in the back-room as a combined decision to avoid the political garbage that gets kicked around in the public and media. One of several decisions was to mean-test SS benefits. The more affluent, past a certain threshold, would have their SS benefits taxed and returned to the Fund. I don't know if the failure to index the threshold to inflation or was deliberate or not. It seems contrary to the purpose of the tax and it would have faced Republican opposition.
Good point, Theo. It was certainly a bipartisan decision. I'm guessing it will be revisited at some point in the future.
@@SandfordSmythe a little confession. What I wrote was almost word for word what is posted on the Social Security website. Not really plagiarism, lol, but I should have attributed it. Anyway , I just want to point out that it wasn’t my opinion. It was a statement from Social Security. They STATED that the thresholds were DELIBERATELY not indexed to inflation in order to eventually cause virtually everyone to have to pay tax on their benefits.
@@johnscott2746 Maybe more politically feasible then just reducing benefits up front? Just take the money back that was just recently given out and save it for next year?
We receive $44K on SS. Since over 32K is taxable and 1/2 of SS is taxable. Standard deduction is $27K. Thus my calculation I can withdraw about$20K every year without paying any tax. Right?
What the government does not understand. Over 65 Retired, small pension and social security, making under $25k a year, while I withhold income tax with IRS and get a small refund it is soon gone to Property Tax. Property tax is $4k and house/car (both paid off) insurance is $4k due to high Market values. SO with that being said, what do I live off of. Stress. How can I maintain my house. No wonder Seniors have crappy housing. My researched showed that paying tax on Social Security after retirement is to help pay back the deficit that the government took out.
I ran the inflation numbers from the beginning of 1985 to the end of 2022 based on social security colas. It was a 280% increase. That would be 70,000 for singles and 90,000 for couples today. Not raising the inflation rate is a pretty smooth way to cut people's social security.
The cola increase is 8.7% in 2023.
@@payperview714 Yes. That would have made my numbers even worse. The social security system just has to sit on their hands and let inflation do the cutting.
Would someone who understands that Social Security payments will start to decrease by 23% in 2033 for everyone getting it, do a financial comparison of getting it at 62, 67, and 70 years of age if the person receiving it was born in July 1962?
In my 70s have not given the government any taxes in many years because I'm in a low tax bracket
40% of us pay no Federal Income tax.
The 0, 50% and 85% thresholds make no sense, based on my tax software, every dollar you earn or take from your IRA results in 85 cents of your SS moving into the taxable line, and this continues with every extra dollar until you hit that 85% limit. Am I calculating this correctly?
Im 67. The SS office told me that while still working only 50% of SS would be taxed not 85%. Whats up?
What is the tax RATE on SS benefits?
Great question, Hans. It all depends on your tax bracket. If you have more income from other sources, it would be a higher rate. If you have less income, it would be lower. You'd have to confirm with your CPA to be certain.
Worked examples would be most helpful. Why not take the median SS income and other income such as pensions of singletons and couples and show how tax is calculated for these 'average' persons?
I'm 75 on SS at just more than 17K a year .
Sounds about right, Jim. Hopefully you're making it work!
Will my Roth 401(k) and Roth IRA account be subject to income tax if I wait until I’m 67 to collect Social Security ?
That would be a no
@@Satjr35031 thank you !
It's important to know that Roth distributions do not count as income and hence won't affect your social security benefits.
Jermaine -- great point! Roth distributions aren't applied to your Social Security earnings limit. Also, traditional IRA withdrawals, pension payments, annuity payments, and portfolio income don't apply to the earnings limit (although they are taxable). It's only earned income they look at. Great comment!
We pay taxes on it TWICE.
I'm retired and my wife is a teacher, with my SSA it causes us to have to pay an extra &1000.00 every year . This is wrong it needs to stop...
Thanks for you video.
Thanks for your help.
If I collect in 2022
Will I recive the COLA in 2023 and 2024 Thank you
Glad you found this helpful, Patrick!
Thank you for your reply. But the question is. If I receive social security in 2022 will I receive the cost of living adjustment in 2023 and 2024? Thank you.
Ah! My bad, Patrick. Yes, once you start receiving Social Security, you will automatically get your COLA increases going forward.
@@PranaWealth
Thank you for your reply. Now my decision is to apply October at 62 or pick up another 8% at 63. Enjoying your videos videos thank you
Always a tough call! That 8% starts to add up, right?
Thanks for the kind words! 🙏
Hi there sir - I need more income now and plan to file early at 62 and keep working. Because of my current income - regarding the taxes on my SS benefits (I will be filing jointly and combined wife and I bring home $75K/year) - when it says I will be "taxed" on 85% of my SS check, does that mean 85% of my SS check will go to taxes? Or, 85% of my check is "taxable"? Or is it the same thing just said in a different way? Sorry if this sounds like a stupid question.
This is actually a great question and maybe something I should have clarified. So up to 85% of your check could be taxed. 85% of your check would NOT go to taxes. Hope that makes sense.
Also, don't forget to watch today's video about taking Social Security while you're working! It could affect you. The new video should be released at 2:45 p.m. EDT.
You really need to talk to someone about filing while still working. It's my understanding that until your full retirement age (yours will be almost 67), if you earn more than $ 19,000 then your SS benefits will be reduced by 1 dollar for every 2 dollars you earn over that $ 19,000. I'm going to assume you earn about $ 45,000. Your monthly SS benefits would be about $ 1700 at FRA but reduced to about $ 1200 because you are filing early. Then, that will be reduced even further because of your earnings - probably down from $ 1200 to around $ 100. You'll get the difference back over time after you reach your FRA. Doesn't seem worth it. I'm not an expert or advisor, but you should talk with one.
@@allrightonthetrail8873 -- You're absolutely right! Check out my next video covering this exact topic: ruclips.net/video/KNr6qpat9IY/видео.html
I am a retired military veteran and I would like to know is VA disability considered income? I have yet to see a video mention this scenario. I hear 401K, pension, etc. Once I start getting my SS benefits, do I have to add my nontaxable VA benefits as income?
Of course, consult with your tax advisor, but I don't believe they're taxable... www.navyfederal.org/makingcents/military-life/are-veterans-benefits-taxable.html
VA benefits are not taxable. I am retired military and my VA benefit is taken out of my retirement check. When you get the 1099R you just go by what they say is your taxable income and what you paid in taxes. Any tax program you use to put your taxes together does all the calculating. I use H & R Block, and have used Turbo Tax.
I am already receiving social security why is social security taxes being taken out of my paycheck from my new job?
They will recalculate your SS benefits
Wait a minute, I live in New York State, isn't that one of the states where they don't tax you?
The State of New York does not tax your SS benefits. But he is talking about federal income taxes. Remember, we pay Federal and State income taxes. And they are different. I hope this helps you.
Is non-taxed VA Disability counted in the combined income?
Serpent64 -- I don't believe your non-taxable VA disability income would be included, however I'm not a CPA or tax preparer. Please confirm all of this with your CPA first.
If you have any sort of non-taxable income (i.e. it goes in box 5a or 6a on your 1040), then it probably isn't included in your MAGI, which is used to calculate all of this.
Again, check with your CPA first. Hope this helps! Thank you for your service! 🇺🇸
@@PranaWealth Thanks for the quick response!
@@serpent645 - Anytime!
No it is not counted.
It is double taxation.
Would that income include VA disability income?
No! VA disability income is not
taxable. You don’t add it to your
annual income when considering
income for tax purposes.
My Social Security annual income is $14,500. Can I start working making $14,000. A year and pay Zero tax?
Why are you worried about paying taxes?
You need to clarify this. It appears that you are saying that there is a financial cliff that you go over when your combined income reaches certain levels. But what you should have said is that the first $32,000 of combined income for a married couple is NEVER taxed. The amount between $32,000 and $44,000, in other words $12,000 , is counted at 50%, so $6,000. And only the amount OVER $44,000 is counted at 85% for taxes. A married couple could have benefits of $3,000 per month each and pay no taxes if this is the only source of income. They could even have money from a traditional IRA and not have any taxes. Suppose they took out $8,000 from a traditional IRA. With their Social Security this would give them an income of $80,000. Half of their Social Security is $36,000. Add the $8,000 from the IRA and they are at $44,000. So, $6,000 of their Social Security would be taxable along with the $8,000 from the IRA for a total of $14,000. That’s less than the standard deduction so they would owe no tax.
This is all fantastic, John! You're absolutely correct. The purpose of the video was to give a high-level overview of how Social Security retirement benefits are taxed -- and to encourage people to consult with a CPA if they're not at their FRA quite yet. With these videos, I'm simply trying to bring awareness rather than go through every scenario.
Exactly! If I can reduce my expenses then I won’t need to draw much from my IRA, so with a low income taxes are kinda negligible.
@@PranaWealth i like how you said trying to reduce tax on SS income is a low priority. Nice honest statement.
Thank you! There are certainly more ways to meaningfully impact your chances of a successful retirement.
Used to be that at age 72, you could make as much as you wanted from any source and get to keep your SS. My dad's boss's wife in the late 60's used her SS to buy booze. They lived in a wealthy neighborhood.
Not sure what this comment has to do with whether or not social security is taxed or not. What someone spends their ss money on has little to do with its taxability. What are you trying to say?
is this right? I would pay no taxes on the first $32,000 of my SS and 50% on any SS between $32,000 and $44,000 which would be taxes on $12,000 ,which is a maximum of $6,000 taxed and 85% taxes paid on any SS over $44,000 if married?
Just saw your question It works this way take your total SS and your spouses add them together you said $32,000 assuming both. Then take 50% of that $16;000 then add that to any other provisional income you have Pensions 401K IRA Dividends exclude any ROTH IRA Maybe you have another $30,000 add that to the $16,000 Equals $46,000 subtract that from $32,000 now it becomes $14,000 50% equal $7,000 then subtract the $42,000 from the $46,000 that becomes $4,000 that is multiplied by.35 that becomes $1.400 add to $7,000 equals $8,500 this is your taxable income out of your $32,000 SS benefits
So I'm trying to understand this video. So assuming I take Social Security at 62 and it's around 1800. I take half of that which is 900. Then I take out of my 401k. So if I take out $25,000. Add that to the 9000 that's 34000. So I assume I will pay taxes on 50% of my Social Security. So what if I take no money from my 401k. I have $1,700 a month in rental income. Can I just not claim that. Of course I lose the write-off in taxes and expenses. But now I will pay zero taxes on my Social Security because it's only $9,000 and I will use rental income as well as my savings. I assume they cannot count cash in my savings as income.
First of all, you have to use your yearly total of your Social Security to figure provisional income. Half of your yearly total plus adjusted gross income and any tax free interest. It doesn’t matter whether the income comes from a retirement account or a job or rental income. If it’s part of your AGI, you have to use it in the calculation. The thresholds tell you how much of your benefits are counted towards taxation. For a single person , if the provisional income is below $25,000, then none of your Social Security is taxable.
1) one example of the taxes should have been explained. example single person makes $100 over the 50% allowed.
2) how to get social security to take out taxes.
3) every other RUclips channel that covers this information do cover #1 an example.
4) no other RUclips video I've seen covering this doesn't cover #2.
Hi can you tell me if A 457 will reduce my SS payments?
Good question! Withdrawals from a 457 plan (or other tax-deferred retirement plan) are taxable, but they are not factored in to the calculation for the earnings limitation. However, they may increase the amount of taxes you pay, reducing what you ultimately take home from Social Security.
@@PranaWealthI know 457's are taxable. I'm wondering if i start receiving 457 payments. Will that reduce my SS benefits i'm currently receiving.?
I've watched several videos on this topic and so far this is my favorite one, for my interests anyway.
Minor Correction (I think) -- Around 3:35 you start explaining how to calculate your "combined income" by saying to start with your AGI (Adjusted Gross Income), add non-taxable income, and then add 1/2 of your SS. However we could argue that the term AGI (line 11 of 2021 Form 1040) technically includes the taxable SS income, an amount we don't yet know. Perhaps we need to invent a different term, like maybe "Interim AGI" until we figure out what the SS amount is? Once we know that, we can calculate the actual AGI (line 11, Form 1040). A small technicality.
I mostly like how you said that trying to minimizing your taxable SS is a low priority. I think what you were saying is that the higher priority would be to minimize taxable income, but I didn't feel like that message came through as loud and clear as it could, or maybe that's just me. For example, I wonder how many people are thinking of maybe getting a part-time job just to keep busy and do not realize that it could easily affect SS taxation. You did mention Roth IRAs to reduce taxable retirement income, which is one strategy I've been working on the past 3 years, transferring my Trad IRA to a Roth in 3 chunks s to keep me in the historically low 12% bracket (thanks to the Trump tax changes) before the bracket gets raised back to 15% or even higher (Democrats were talking about doing so). But I think it's worth mentioning that getting a part-time job may be a bad move tax-wise. If you really want to get out into the workplace, there are places where you can volunteer, like a political campaign, or AARP has some volunteer options, or in my case, a local thrift store that turns over most of its proceeds to a responsible missions organization that wisely spends its funds helping people around that world that are enduring droughts, floods, earthquakes and such. Volunteering may "pay" more than a paying job.
No one can live with SSI only, join volunteer jobs when having a hard time by fixed income pay for simple food when everything in the market is going up also young people are getting bankrupt by student loans, the only thing never changed is billions of US taxpayer fly to Israeli for free to enjoy life by socialism, when US congress run by the same member, zionist Jews AIPAC who paid for their election like Dianne Feinstein wjp did not want Resign when she could not move
Time to petition the government
So I am single. If I make 18000 a year in dividend income and 17400 a year in SSI will i have to pay any taxes??
Is SSDI taxable
Good question, Mike. It depends -- if someone receiving SSDI has other income, it could potentially be taxable. Here's a good article from AARP with the details:
www.aarp.org/retirement/social-security/questions-answers/are-disability-benefits-taxable.html
Double taxation is illegal. And yet our government is taxing SSI.
Don't make too much money. I'm sure he said this. The dollar taxable threshold is in your SS documents. Everyone is different. In my case its 19 grand a year. My suggestion is ( if you must.) Work for cash. I'm living on 10 grand a year on my SS & saving scads of money. Key no mortgage & a low cost state.
Or at least wait until your Full Retirement Age (FRA) to collect if you're still working!
You said SS taxes do not go into the general pool. Yet Congress gets to spend from SS pool leaving IOU with our name on it, no ?
Walter, it's my understanding that Social Security is a pay-as-you-go system. In other words, FICA taxes paid by people currently working is used to fund current benefits recipients. The SS trust is supposed to make up for any shortfall. It's also my understanding that the SS trust has been used as collateral for government borrowing. Let me know if I'm wrong on this. It seems that it may not be sustainable, but I guess we'll just print more money?
@@PranaWealth It may be that way now. My understanding was that the Fica taxes were to be seperate, the SS fund. Invested and grown, and it did until the Congress saw a growing fund and voted to spend it on things outside what it was meant for. It is the failure of a democracy once it is realized they can vote to spend, spend, spend,... The Congress, in a slight of hand fiscal trick, replaced the monies they spent with IOUs. However, these IOUs are in our names not thiers. And an IOU can not be invested for further growth.
Walter, it does sometimes feel like the scene at the end of "Dumb and Dumber" when they've spent all the money and there's nothing left in the suitcase other than paper "IOUs".
@@PranaWealth This system was part of the design of SS back in 1935. Wall St and the Banks were bust, and the US Treasury was the safest thing around. Any SS surplus is immediately used to buy Bonds. The certificates for these are sitting in a file cabinet at the SS Headquarters. The investment is collecting interest which is then rolled over to buy more bonds. The money goes in the general fund "anonymously" and can not be ear- marked for any special projects. These certificates are as valid as any other Government issued bonds. Defaulting on these would seriously damage our credit rating. Yes, the tax-payers will pay for them when they are redeemed, like they do with any other bonds from China or elsewhere. These is pretty simple knowledge and is on the SS Website. Unfortunately this has been distorted to stir up discord for political and commercial reasons. I would not touch this with a 10 ft pole.
@@SandfordSmythe -- Thanks for the insight! And you're right, the comments on this one have been more political than all my other videos. Lots of frustration out there.
SS sent me a letter saying I get $1571.
As of March 2023 on my 62nd birthday.
So will they take out taxes ?
And I should get $1200 Net ?
Thx
They don't unless you ask them to. Figure out what you need (if) withheld, and file a W-4V form to select what % you need withheld. You can file it multiple times during the year as your taxable numbers firm up for the year. They don't withhold state, if you're in one of the 12 states which tax it ...
@@lylestavast7652 I’m in Tx so no state tax.
They sent me a letter that said $1571 a month.
I just wonder if it’s gonna be like $1200 after taxes. Then I read since I have a pension
They will tax half of my SS check.
So I mite receive $1400. Net.
I worked for 44 years And I still have to pay tax Do retirees should not have to pay tax Because we did our time I'm 66 You're old that's ridiculous.
Can you or anyone else show me any LAW that states people have to pay any tax on income? On profits yes, capital gains, investments that make money. If an income tax is law, why does the gov. force employers to take in come taxes out of your check and not the people to just pay it to the gov each and every week? And as for S.S The gov. now labels S.S. as a Benefit. Benefit it is not.
😎
Damn it must be a privilege to even pull
Down so much on SS that you owe income tax on it!
Crap i earn a smidge over twenty grand a year, and for the 12 years i been on it now,
I have never paid a single penny in tax !
Steve -- we do have a progressive tax system set up: the more you make, the more tax you pay (and vice versa).
I wish I paid $11 billion like Elon Musk.
Sadly... I will pay taxes on 85% of my social security because of pension income...
P.C., it's pretty common, unfortunately. The silver lining is that you do have a pension -- which pretty uncommon these days!
Yes very sad
Give me your pension and I’ll cover the 85% for ya....😂 I wish I had a pension.... I will still pay 85% of SS because of my 401k distributions...
But we have to admit that having a pension is a great gift. I am very appreciative to UPS for mine!
Even though having a pension makes taxes more complicated, it's never a bad thing! 🙌
Thank you Jimmy Carter for taxing SSA...
Don't blame Carter
For taxing SS, blame: Ronald Reagan, and the Republicans !!
Always Vote Democrat !!
So, if you make enough to live on, they will tax you.
Pretty much seems that way, Mak Daddy.
Death and taxes, bro.
Each politician adds someone on it that never was meant to be on it makes him look good
Pretty much.
Humbug. Minimizing ALL taxes is the duty of every citizen, including SS.
As long as you're following the law, minimize it!
Progressive tax does not mean "the more you make, the more you pay". That would also be true of a flat tax. Progressive taxation means that the more you make the higher rate you pay.
prefer your flat plan. However 49% of population does not understand.
Preferring to be duped.
The comment “taxes on social security go into the SS trust fund, not the general treasury,” is a distinction with little relevance, the trust fund is invested in treasuries, i.e., lent to the Treasury or general fund. These days, with more and more retirees, the Trust Fund balance is going down, so the trust fund is slowly seeking repayment from the treasury.
The taxes are invested in Treasury bonds. That is not same as giving the Treasury money. And this money is being sent now directly back to SS. It is not going to Ukraine or what every.
Don't some states have better/ less taxes on SS
I don't pay any taxes on my Social Security or anything else. I get everything back that i paid each year.
Don't you remember that's how this country started more taxes being taxed twice is nothing every thing we buy is taxed to be produced and taxed to ship taxed whe sold to the store and then you pay taxes and in some places like were i live if i have a garage sale and sell it it gets taxed again unfortunately i was born after January 1972 and we won't be seeing any of our social security so they can't tax us except we will still be working
Don’t forget about how your state taxes SS benefits.
Hey Prana can you explain to us the rationale behind the marriage tax penalty? Yes I dare you.
Ha! @Triplecap -- was there a rationale? I didn't make any of these rules up, so I certainly can't defend them. It is what it is until the tax code changes.
SSI is based on traditional welfare rules. Your income is means-tested. The more you make, the less you get.