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Old 07-26-2014, 06:32 AM
 
Location: Los Angeles area
14,018 posts, read 17,763,041 times
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Quote:
Originally Posted by jlawrence01 View Post
I would not make the assumption that the farmer did NOT know that he should be paying the self-employment tax. I have seen a couple of cases where the earned income was not declared and the farmer assumed that he would receive benefits.

Reminds me of the friend who was always boasting that she did most of her contractor jobs "under the table." I guess she paid a lot less in taxes. However, she cannot buy a home since the lenders want to see her tax returns as a basis for the loan.
Excellent point. Those who cheat the system are hypocrites if they later complain that they are not getting what they want from that same system! We make our own beds, then we have to lay down in them.
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Old 08-06-2014, 10:41 AM
JRR
 
Location: Middle Tennessee
3,687 posts, read 2,233,446 times
Reputation: 5245
My wife and I had planned on both taking our Social Security in January 2015 (me at 65 & 4 months and her at 64 and 1 month). Now I think we are going to have her still start in January but I will file a restricted application for spousal benefits when I reach FRA of 66. I can get 50% of her FRA amount and then change to my own increased benefits when I turn 70. That way I get the 8% annual increase to my own benefits between 66 and 70 along with some income every month and if I die first, she can switch to my increased benefits for the rest of her life.

Boy, between figuring out the nuances of Medicare and Social Security, retirement can be a bit complicated!
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Old 08-06-2014, 12:45 PM
 
2,043 posts, read 1,953,816 times
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Quote:
Originally Posted by JRR View Post
My wife and I had planned on both taking our Social Security in January 2015 (me at 65 & 4 months and her at 64 and 1 month). Now I think we are going to have her still start in January but I will file a restricted application for spousal benefits when I reach FRA of 66. I can get 50% of her FRA amount and then change to my own increased benefits when I turn 70. That way I get the 8% annual increase to my own benefits between 66 and 70 along with some income every month and if I die first, she can switch to my increased benefits for the rest of her life.

Boy, between figuring out the nuances of Medicare and Social Security, retirement can be a bit complicated!
It's really confusing and hard to understand but trying to get better at it. Assuming the spouses are about the same age (within 5 months of each other) would your strategy always be better for the higher income spouse to get the 50% of the lower income spouse's FRA and let the 8% annual increase apply to the higher income spouse so the higher income spouse collects full increased benefits for life?
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Old 08-06-2014, 01:30 PM
 
14,267 posts, read 24,025,211 times
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Quote:
Originally Posted by Escort Rider View Post
Excellent point. Those who cheat the system are hypocrites if they later complain that they are not getting what they want from that same system! We make our own beds, then we have to lay down in them.

I asked my FIL, a dairy/beef farmer if he thought the story was credible. He ALMOST fell off his chair laughing at that farmer. He said that farmers are independent business people and know they have to pay taxes.

He says, "What is next? The chocolate milk cow?"
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Old 08-06-2014, 02:52 PM
JRR
 
Location: Middle Tennessee
3,687 posts, read 2,233,446 times
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Quote:
Originally Posted by fumbling View Post
It's really confusing and hard to understand but trying to get better at it. Assuming the spouses are about the same age (within 5 months of each other) would your strategy always be better for the higher income spouse to get the 50% of the lower income spouse's FRA and let the 8% annual increase apply to the higher income spouse so the higher income spouse collects full increased benefits for life?
With the scenarios I've seen, it is preferable that the lower income spouse does file first with the higher income spouse building the higher benefits to 70. For us, we have almost the same benefits at FRA, so we are going by me reaching 66 first to receive the spousal benefits.

The three criteria are 1) The person filing the restricted application for spousal has to be at least 66 2) They cannot have already filed for their own benefits and 3) The spouse has to already have filed for or is receiving their own benefits.

What is a nice sweetener is that the spousal benefit is 50% of the FRA benefit of the first filing spouse, not 50% of the benefits they are actually receiving. So if my wife is FRA is $2000 and she will actually receive say $1700 by filing at 64 years, I would get $1000 spousal; not $850.
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Old 08-06-2014, 04:11 PM
 
71,831 posts, read 71,919,037 times
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when one spouse files early for spousal and they are collecting their own early they get less than 1/2 of the other spouses fra.

how it works is they take 1/2 the higher spouse's fra and subtract the lower spouses fra. what is left is added to the lower spouses benefit.


if mary filed at 62 and gets 500 a month and her full would have been 750, and her husbands full is 2000.00 a month it would work like this:

half of the husbands is 1000 less mary's full which was 750.00 = 250.00. so mary gets 250.00 added to her existing 500 for a total of 750.00.
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Old 08-07-2014, 04:51 PM
 
29,816 posts, read 34,907,142 times
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Quote:
Originally Posted by JRR View Post
With the scenarios I've seen, it is preferable that the lower income spouse does file first with the higher income spouse building the higher benefits to 70. For us, we have almost the same benefits at FRA, so we are going by me reaching 66 first to receive the spousal benefits.

The three criteria are 1) The person filing the restricted application for spousal has to be at least 66 2) They cannot have already filed for their own benefits and 3) The spouse has to already have filed for or is receiving their own benefits.

What is a nice sweetener is that the spousal benefit is 50% of the FRA benefit of the first filing spouse, not 50% of the benefits they are actually receiving. So if my wife is FRA is $2000 and she will actually receive say $1700 by filing at 64 years, I would get $1000 spousal; not $850.
Bada Bing
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Old 08-10-2014, 10:38 PM
 
466 posts, read 291,504 times
Reputation: 1809
Quote:
Originally Posted by Bideshi View Post
Good points. I am thinking of having my wife defer taking her spousal SS at 62 until FRA. The reason is that I have to take minimum distributions from my 401K now and that already puts us into the income range that taxes our SS income. Her spousal benefit would make it even worse.
I asked this before, but your post seems to indicate a different answer than the one I received. I believe I was told that the "outside income" that would impact the SS income (2 for 1) only counted against non-passive income, like a job. If you took only 401k distributions, they were considered passive and would not count in the 2-1 calculation. Do I have this wrong? I planned on taking a total of $50K to live on each year from my 401K, and reducing my 401K distributions by the amount of SS I'd get at 62 by what ever amount kept me at $50K a year. Is this wrong-thinking? Will I still get dinged by SS if I take the additional amount needed to keep me at $50K a year from my 401K, or are 401K distributions exempt because they are passive?
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Old 08-11-2014, 03:42 AM
 
71,831 posts, read 71,919,037 times
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passive income does not count
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Old 08-11-2014, 05:47 AM
 
Location: Baltimore, MD
3,746 posts, read 4,224,664 times
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Quote:
Originally Posted by Kgryfon View Post
I asked this before, but your post seems to indicate a different answer than the one I received. I believe I was told that the "outside income" that would impact the SS income (2 for 1) only counted against non-passive income, like a job. If you took only 401k distributions, they were considered passive and would not count in the 2-1 calculation. Do I have this wrong? I planned on taking a total of $50K to live on each year from my 401K, and reducing my 401K distributions by the amount of SS I'd get at 62 by what ever amount kept me at $50K a year. Is this wrong-thinking? Will I still get dinged by SS if I take the additional amount needed to keep me at $50K a year from my 401K, or are 401K distributions exempt because they are passive?
There are two different issues here. The $2 for $1 does not refer to the taxation of SS income. For every $2 in earned income, your preFRA benefit is reduced by $1 for every $2 more than $15,480/year. (Different calculation in the year you reach FRA). Retirement Planner: Getting Benefits While Working

The second issue relates to taxes. In that case, except for Roth distributions, passive income IS included when determining the taxation of SS benefits. Benefits Planner: Income Taxes And Your Social Security Benefits
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