I'm getting near "that age". What can someone tell me about how Social Security is taxed?

[Progressive Jones]

[dweller]

1. You fill out a tax form W-4V

and you choose what % tax you want withheld …
7%, 10%, 12% or 22% , or you can have no tax taken out


✌🏻

[OAITW r.2.0]

2. Depends if you want to stop.

A little work? Talk to a real financial advisor.

[MichMan]

3. Same as any other income

If you are still working part time and retiring before full retirement age there is an income limit

[Progressive Jones]

4. I'll be 67 or 68 when I retire. nt

[MichMan]

5. No limit on earnings then

[Hoyt]

6. For Feds, it depends on how much you make from other sources.

If you are just getting Social Security and nothing else, you probably won’t pay any fed taxes. If you are at the upper end like over something like $35K a year, you might pay a little.

Around $35K from all sources of income, feds start taxing a portion of Social Security benefits.

The specifics — amount taxed, thresholds for taxation if single or married, etc.— are easy to find.

It’s really important to determine at what age you start drawn SS because you get about 8% more in benefits each year you wait beyond 62, up to 70 or so.

Some states do not tax retirement income. Others do.

[gab13by13]

9. Pa. does not tax retirement income, including pensions.

[Progressive Jones]

7. Thanks for the replies! nt

[gab13by13]

8. Depending on your taxable income,

you may not have to pay taxes on all of your SS. There is a SS work sheet to figure out how much is taxed. I deduct 10% if I remember right. It all depends how much other income you have. You don't have to take disbursements from a 401k until 70 1/2 years old, I believe.

[progree]

10. Try a Social Security taxes calculator

Its very complicated without. Depending on your taxable income and amount of SS benefits and some other factors, anywhere from 0% to 85% of your S.S. benefits will be added to your taxable income.

I got what looks like good results Googling: social security tax calculator

This calculator doesn't look too complicated: https://www.covisum.com/resources/taxable-social-security-calculator

E.g. a single person with a $30,000 taxable income (excluding SS benefits) and getting $18,000 in SS benefits (that's $1500/mo average), and $0 for the special items, would have $8,750 of his/her SS benefits taxable.

[honest.abe]

11. This the correct answer to the original question regarding federal taxes.

However there is also the matter of state taxes. Most do not but a few do. Just google it.

[progree]

12. 37 states don't tax S.S. benefits

I took your advice and did a quick Google. I didn't know off the top of my head whether Minnesota, my state, taxes them. Unfortunately (for me) it does.

This turned up in my search:

https://www.fool.com/retirement/2021/11/12/37-states-that-dont-tax-social-security-benefits/

If you retire in one of these 37 states, you won't have to worry about your benefits getting taxed at the state level:

Alabama
Alaska
Arizona
Arkansas
California
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Mississippi
Nevada
New Hampshire
New Jersey
New York
North Carolina
Ohio
Oklahoma
Oregon
Pennsylvania
South Carolina
South Dakota
Tennessee
Texas
Virginia
Washington
Wisconsin
Wyoming

[honest.abe]

13. Surprising California does not given its reputation for high taxes.

We plan to "retire" there. I have to keep working until around age 70 since I have a kid in elementary school. However I already applied for social security benefits which start this month and since I am FRA there is no deduction for making too much money.

[marie999]

14. Some states tax Social Security. Just Google it and you will find which states and how much.

[DFW]

15. I guess I'll find out some day

At almost (next year) 70, I guess I must be eligible, but if you still work full time, can you ask for your social security to be paid out, or do you need to be retired? I never even thought about it, but if it's mine and just sitting there, I suppose I could apply for it, pay the taxes, and spend what's left over on things I consider useful. There are never enough Democratic candidates or branches of Planned Parenthood.

[progree]

16. Your benefit increases 8% for each year you delay UP TO AGE 70, *BUT*

DO NOT DELAY BEYOND AGE 70!!!

because you simply lose the benefits you could have collected and there is no more 8%/year increase for any more years of delay beyond age 70. E.g. someone who begins collecting at say 72 simply begins collecting at 72, the same amount they would have gotten if they started collecting at age 70. Except they collected nothing at age 70 and age 71. That's simply gone, never collected.

Whether you have earned income or not does not affect you at all after full retirement age. You can work and earn as much as you want after full retirement age without any reduction to your S.S. benefits. People born in 1943-1954 have a full retirement age of 66. For those born after 1954, see this -- https://www.ssa.gov/benefits/retirement/planner/agereduction.html

I'm not an expert, but I do know one thing for sure -- if you delay past age 70, you simply forfeit benefits.

I'm not sure exactly when one must apply to not miss out on any benefits, but its definitely not too soon to find out for sure . I'd hate to see you lose out. If you feel its no big deal, consider instead if you collected what you should have collected and donated to good causes and good candidates.

BTW people who collect benefits and work BEFORE full retirement age (but at or after age 62) and earn above the maximum don't lose any benefits either -- they are simply delayed until full retirement age.

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

https://www.aarp.org/retirement/social-security/questions-answers/when-does-earnings-limit-expire.html

[DFW]

20. I turn 70 next year

I’ll see about starting to collect after my birthday. I hope the USA and Germany don’t both lay claim to this too, or else I’ll end up with barely enough for a portion of clam strips in Provincetown next year.

[progree]

26. I think you have to start the process about 4 months earlier, otherwise you will miss out on some

payments.

[DFW]

27. OK thanks for that

That means I should get started this month. Work is crazier than usual for a December, and I’m sitting in a plane bound for Madrid at 7:00 AM, amazed they haven’t told us to shut off our phones yet. I’ll be back in Germany over the weekend, though, and will start looking to find out what I can.

[progree]

28. Yes, I know you're a very busy person, I read your posts with great interest. Good luck 👍

[DFW]

30. Sometimes, I wish I were less busy

These days, I spend half my time filling out paperwork, just so I have all the necessary forms and permits to visit countries that I used to travel to as if they were across the street. In U.S. terms, they practically still are across the street, but with all the virus precautions, I have to bring a folder full of forms every time I go somewhere. Just to get down here to Spain from Germany, I had to get several forms filled out online, and if you make one tiny error, you get refused. As it is (I'm now in downtown Madrid), at the airport, if you didn't have EVERYTHING the Government of Spain wanted (I did), you were refused entry until they were happy with what you COULD furnish, or else got shunted off to some testing area. If I get back to Düsseldorf tomorrow night without incident, I'll be one very happy man--tired, but happy!

[honest.abe]

17. At 69 you can collect now and keep working with no deductions for income.

In fact you could have begun collecting at 66 and kept working although at the lower amount.

If I were you I would submit now and start collecting the money and donate it to some worthy cause if you dont need it.

[DFW]

18. Thanks for the info. I really had no idea

I don’t even know where to ask, but my people back in Dallas will

[honest.abe]

19. you can submit it all online.

Just create an account here and go through the online request for benefits to start.

https://www.ssa.gov/myaccount/

Its very easy if your situation is typical. They called me back within a few days and was approved within a week with nothing extra to submit. I was amazed how efficient it was.

[DFW]

21. Alas, my situation is anything BUT typical

Employer and pay in the USA, legal residence in Germany. Parts of my income are taxed at 50%, and the rest at 70%, since Germany does not fully recognize the double taxation treaty, and the USA does not recognize residence-based taxation for its citizens—one of 2 countries in the world for whom that is true (the other is Eritrea).

[honest.abe]

22. Yeah, that might be a bit more complicated!

Good luck!

[DFW]

32. It was more complicated, you're right.

I took 15 minutes out from my work here, and started answering their questions. It stopped at one point, and brought me back to the beginning, as if I hadn't answered one question. I get the feeling my situation doesn't fit comfortably into all their little boxes. I'll try again when I have more time, or maybe make an appointment when I'm back in the USA.

My status, residence, marital situation (non-citizen spouse who is retired and receives a German pension, if you can call a taxable €850 a month payment a pension!), don't seem to fit comfortably into their expected answers. Then they wanted to know about my work status, income, etc. That may not have been what they were looking for, either. I'm just waiting for someone to contact me to ask if I need the money, and then freak out when I say, "no, I'm looking to donate it to Planned Parenthood."

[honest.abe]

33. Not surprised. You probably need to call but be prepared to wait a loooong time to get through.

I called them once about an issue with my account and I think I waited about 30 mins and unfortunately they dont give an estimate on wait time. I just left my phone on speaker and kept working until someone finally took my call. Apparently there are better days and times to call but I dont remember that now.

Anyway good luck again!

[Beaverhausen]

23. I'm 62 and my friends all say NOT to wait to start collecting

They say all those years you don't collect is just wasted money, even though you get more the longer you wait.

Some say start now (!) but I plan to wait until my full retirement age.

I will likely still have to work a few years past that but I do need to talk to a financial planner about this.

[phylny]

29. I took mine at 62

and my husband, the higher earner, waited until he was 66 and 3 months.

[jonstl08]

24. Depends on other income

Whether Social Security is taxed depends on if you have other income such as pension. IRA/401K distribution and etc.

Formula is complicated but up to 85% of social security can be taxed at whatever tax bracket you are in.

[edhopper]

25. Let us remember

that it was Reagan who started taxing Social Security benefits.

[Deminpenn]

31. Link to IRS information

Here's the link to all the info from the IRS: https://www.irs.gov/forms-pubs/about-publication-915

Form 703 is the worksheet to calculate what, if anything, might be taxable.

[Progressive Jones]

34. Thank You All For Your Input! Have a great weekend! nt

[Wounded Bear]

35. BTW, we have a Seniors group...

https://www.democraticunderground.com/?com=forum&id=1183

Discussions about the problems/challenges/joys that seniors face.