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Well, I was talking to someone and mentioned my retirement plan, and I thought I heard them say that everything counts as income. It's possible I heard them wrong. The person I was talking to is not an accountant or any kind of financial expert, so I didn't take it too seriously. Also, it wouldn't make sense to consider a pension as regular income.
However, I would not be too surprised if our government decided to screw us in that way, so I got very worried. I decided to ask at this forum as soon as I got a chance, and got an answer right away. I tried searching in google but could not find the answer, at least not easily.
It's also nice to know they will pay us back, to some extent anyway, if we earn too much from working and get penalized. So far I just read it fast, but I think that's what it says.
That's right, and that's the little known part of the earnings limitation. The money that is withheld from your benefit from having too much earned income is not lost forever, provided that you live long enough to recoup it. When you reach full retirement age (66 for most of us posting here) they will recalculate your benefit to reflect the amounts withheld earlier. I don't know the nature of that recalculation, however, or how many years it will take to recoup the withheld amounts.
file a federal tax return as an "individual" and your combined income* is
between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
more than $34,000, up to 85 percent of your benefits may be taxable.
*Note: Your adjusted gross income
+ Nontaxable interest
+ ½ of your Social Security benefits
= Your "combined income"
So as not to confuse the OP I think it would be wise to define 'income' when explaining SSA benefits. There is "earned income" from employment...and there is "income" from pensions, annuities, interest and/or dividends. There's a big difference in how the SSA views these two distinctly different 'incomes'.
So as not to confuse the OP I think it would be wise to define 'income' when explaining SSA benefits. There is "earned income" from employment...and there is "income" from pensions, annuities, interest and/or dividends. There's a big difference in how the SSA views these two distinctly different 'incomes'.
Your post was better before you added the link. The link relates to SSI benefits, a means tested (poverty) benefit, not the regular Social Security retirement benefit.
I was simply trying to point out that perhaps her friend/colleague was referring to taxation of social security benefits, which does indeed include all income, (excluding income from Roth IRAs) that might not otherwise be taxed.
Songbird52 is well educated and I'm sure she understands the difference between earned and unearned income.
Remember you are still ahead by working and you will also get the money back that SS took (but not any increased taxes) because you earned too much. Unfortunately, the rules seem to discourage work. Wonder why?
By the way I think the money is taken from you the year after you earn it so if you do work you might want to make sure when it is deducted and budget for the reduction as you may not be working in that year.
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