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Old 02-23-2015, 02:25 PM
 
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I was laid off and have applied for social security. Right now I'm not working but could potentially get a job. What do I do about paying taxes on SS then? I understand that for every $2 earned, you have to pay $1 in taxes. Do you tell them and they start withholding it? How does it work?
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Old 02-23-2015, 02:29 PM
 
Location: in the miseries
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Yes you let them know.

They'll want an estimate of future earnings.

Or you could withdraw, repay any money received.

But only within the first year.
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Old 02-23-2015, 03:01 PM
 
Location: OH>IL>CO>CT
5,238 posts, read 8,413,404 times
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Quote:
Originally Posted by suaz View Post
I was laid off and have applied for social security. Right now I'm not working but could potentially get a job. What do I do about paying taxes on SS then? I understand that for every $2 earned, you have to pay $1 in taxes. Do you tell them and they start withholding it? How does it work?
Not quite correct.
What happens is SS "deducts $1 in benefits for each $2 in earnings you have above the
annual limit ($15,720 in 2015)
. BTW, you do not lose these deductions. They are deferred until you no longer subject to the deduction.

This is explained on page 13 of this SS webpage
http://www.ssa.gov/pubs/EN-05-10077.pdf

And yes, you need to notify SSA of any earnings from a new job. From page 8 of the above:

"If your estimated earnings change
If you’re working, SSA will usually ask you to estimate your
earnings for the year. If later you realize your earnings
will be higher or lower than you estimated, let us know
as soon as possible so we can adjust your benefits"
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Old 02-23-2015, 03:26 PM
 
Location: Hiding from Antifa?
6,422 posts, read 4,183,124 times
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If you have reached full retirement age(FRA) you won't have any deductions other than taxes you agree to have withheld.
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Old 02-24-2015, 03:01 AM
 
71,669 posts, read 71,801,099 times
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Quote:
Originally Posted by suaz View Post
I was laid off and have applied for social security. Right now I'm not working but could potentially get a job. What do I do about paying taxes on SS then? I understand that for every $2 earned, you have to pay $1 in taxes. Do you tell them and they start withholding it? How does it work?
you are mixing up two things .

working under fra has you giving back one dollar for every two you earn over the limit. you get that money refigured back in at fra as if you retired at an older age.

if you lost 25% of the payments each year for 4 years than you would be deemed to have retired a year later and recalculated at fra.

on the other hand taxes on ss are tied to your modified adjusted gross income and can range from zero to 80% of ss.

that stays forever and has nothing to do with the above.. that is income after all credits and adjustments but before deductions . things like muni bond interest and money from retirement plans get added to all other income.

that is a wicked tax . it has two moving targets. the social security gets taxed based on the magi and the higher the magi the more ss gets taxed increasing the magi getting more ss taxed and around and around we go. the marginal rate at the end can be very high.

it is important to plan out your retirement income very carefully as big bucks in taxes are at stake.
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Old 03-14-2015, 08:06 PM
 
Location: Cape Elizabeth
425 posts, read 387,774 times
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Let me try to explain how SSA treats work and earnings.
If you were born January 2, 1943,through January 1, 1955, , then your full retirement age for retirement insurance benefits is 66. If you work, and are full retirement age or older, you may keep all of your benefits, no matter how much you earn. If you’re younger than full retirement age, there is a limit to how much you can earn and still receive full Social Security benefits. If you’re younger than full retirement age during all of 2015, SSA must deduct $1 from your benefits for each $2 you earn above $15,720. If you reach full retirement age during 2015, SSA must deduct $1 from your benefits for each $3 you earn above $41,880 until the month you reach full retirement age.
However, for one year and one year only, you are allowed an SS check for any month in which you do not work, no matter how much you earn in the other months. That is called the monthly test. SS has it so people who want to retire, say end of Sept. and have already earned say $55000.00 that year, they can still receive benefits for Oct to Dec.

So. If you were laid off in December, 2014 and applied for your SS eff. 01/2015, and will not be 66 this year, they asked you how much you plan to earn from work in 2015. You probably said "zero because I am not working". Fine. So, SSA begins sending you a check a month.
But, lets say in June of this year, you get a job. You then have to figure "how much will my new job pay me in the calendar year 2015?". Say it will only pay you $12,000.00 from June to Dec. 31. Well, that is under the $15720.00, so you are due all your checks and you don't have to report anything to SSA.

But, say, your new job will pay you $36000.00 for the year, so in the 7 months - June thru Dec, you will earn $21000.00 (7 x $3000= $21000.00). You then must call SSA -1-800-772-1213, and report your new earnings estimate. If you don't, SSA will keep thinking you are earning less than $15720.00, and will keep sending you checks. You will have a big overpayment when the year is up and your earnings, $21000.00, hit your record.

But, if you keep them apprised of your earnings, they will adjust your benefits accordingly and you will not be overpaid. \
So, let's say, the new job doesn't work out, and by the end of August you quit or are again laid off. You then call SSA back, say, hey, I thought I was going to work June to Dec and earn $21000.00, but now I lost my job again, so I only worked June, July and August and made $9000.00. I don't think I will work again this year. So, now, you are again under the limit for the year, and SSA will promptly send you the checks for June, July and August. Now, what, mathjak 107 is talking about is a recalculation that SSA does when the year the person reaches full retirement age is over. SSA looks at a person's record and says "how many full checks did that person receive before they were full retirement age? If a person due to their work and earnings did not get all the checks from the time they initially applied to the time they reached full retirement age, they have an "ARF" -adjustment of the retirement factor. That ARF only permanently reduces their benefit for the actual number of checks they received before full retirement age. That is good.

Now, your question about the $1.00 for every $2.00 is the way the yearly test is applied when a person does work and earn over the $15720.00. So, using my example of $21,000.00 for the year - the first $15720.00 is subtracted (SSA does not care about those earnings). That leaves $5280.00 of your $21000.00 that SSA cares about. But, they also don't care about $1.00 for every $2.00 of the $5280, so we divide it in half. That leaves $2640.00 that they really care about. The $2640.00 is the amount of benefits that must be witheld from your SSA checks in the year 2015. That is the amount you would be overpaid if you didn't report the $21000.00.
The way SSA holds back the $2640.00 is month by month, depending on how much your SS check is. So, if your SS check is $1200.00 a month, in 2 months and part of a third, they would have done all the holding back they needed to. That would be your June check, your July check and actually, initially your August check. But, when 2015 is over, and you say you actually earned $20,875 (on your W2), SSA will send you the part of August or whole of August that they owe you.

I hope this helps. BTW, I am a retired SSA "technical expert" -silly job title, which just meant that I was a senior employee, mentor, trainer etc. I retired after 35 years because I was so upset about the way the agency was going- thrusting everyone on to the internet to do it themselves. It is a very complicated, very important program and the citizens of our country deserve better than to be left to fend for themselves.
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Old 03-14-2015, 09:18 PM
 
33,046 posts, read 22,072,092 times
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Quote:
Originally Posted by reed303 View Post
Not quite correct.
What happens is SS "deducts $1 in benefits for each $2 in earnings you have above the
annual limit ($15,720 in 2015). BTW, you do not lose these deductions. They are deferred until you no longer subject to the deduction.

This is explained on page 13 of this SS webpage
http://www.ssa.gov/pubs/EN-05-10077.pdf

And yes, you need to notify SSA of any earnings from a new job. From page 8 of the above:

"If your estimated earnings change
If you’re working, SSA will usually ask you to estimate your
earnings for the year. If later you realize your earnings
will be higher or lower than you estimated, let us know
as soon as possible so we can adjust your benefits"

Which means that if you die before you reach Full Retirement Age, you lose these deductions.
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Old 03-14-2015, 09:27 PM
 
Location: Los Angeles area
14,018 posts, read 17,747,361 times
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Quote:
Originally Posted by freemkt View Post
Which means that if you die before you reach Full Retirement Age, you lose these deductions.
True enough, but why agonize about such things? If that possibility is not to your liking, you can wait until full retirement age to collect. But that subjects you to a further "what if": If you die two days before your decided upon collection age, whether it be 62, 66, or 67, then you collect nothing.
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Old 03-15-2015, 01:07 AM
 
33,046 posts, read 22,072,092 times
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Quote:
Originally Posted by Escort Rider View Post
True enough, but why agonize about such things? If that possibility is not to your liking, you can wait until full retirement age to collect. But that subjects you to a further "what if": If you die two days before your decided upon collection age, whether it be 62, 66, or 67, then you collect nothing.



I do not expect to live to full retirement age, so why would I wait to collect?
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Old 03-15-2015, 01:40 AM
 
71,669 posts, read 71,801,099 times
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no one expects to live to fra but somehow 85% of women and 78% of men are still alive not just at 66-67 but until 75 for a man and 78 for a woman ..

it does not matter what you think .
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