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Old 02-18-2016, 11:56 AM
 
Location: Jamestown, NY
7,841 posts, read 7,334,770 times
Reputation: 13779

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Quote:
Originally Posted by daves 57 View Post
I should have mentioned that im full retirement age 66 and im still working until September at which time ill have earned approx., 50,000. so if I add the 27,000 to the 50,000 that will put me at 77,000. maybe I should have my employer deduct an extra 100 dollars a week from my pay in federal taxes to help offset anything I might owe?
You'll probably have to pay tax on 85% of your SS this year. Depending upon how much non-SS income you have in the year(s) after you retire, you may or may not have to pay federal tax on your SS. I have a pretty good pension, so I will always pay tax on SS but maybe not on the entire 85% (I haven't calculated it). This year, I will pay on my SS because I will work for 1/4 of the year as well as receive 3/4 of my pension plus I'll get an early retirement lump sum.

I'd rather pay the taxes and have a comfortable retirement than the opposite.
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Old 02-18-2016, 12:12 PM
 
Location: Gilbert, AZ
3,182 posts, read 1,963,283 times
Reputation: 3321
Quote:
Originally Posted by daves 57 View Post
I should have mentioned that im full retirement age 66 and im still working until September at which time ill have earned approx., 50,000. so if I add the 27,000 to the 50,000 that will put me at 77,000. maybe I should have my employer deduct an extra 100 dollars a week from my pay in federal taxes to help offset anything I might owe?
As mentioned already, use TaxCaster (free) or similar to estimate your tax bill for the year. If needed, ask for more $$ to be withheld from your paycheck... that's simpler than making quarterly estimated payments.
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Old 02-18-2016, 12:12 PM
 
Location: OH>IL>CO>CT
5,238 posts, read 8,413,404 times
Reputation: 7191
Quote:
Originally Posted by daves 57 View Post
I should have mentioned that im full retirement age 66 and im still working until September at which time ill have earned approx., 50,000. so if I add the 27,000 to the 50,000 that will put me at 77,000. maybe I should have my employer deduct an extra 100 dollars a week from my pay in federal taxes to help offset anything I might owe?
You won't add the whole $27K. The amount of SS benefits that you add to other income is based on a sliding scale from 0% to 85%, depending on the amount of other income. The IRS has a worksheet on page 16 of https://www.irs.gov/pub/irs-pdf/p915.pdf that is what you need to use to arrive at the amount you add to other income.

Using that amount, along with other information, you could then use the IRS on-line Withholding Calculator at https://www.irs.gov/Individuals/IRS-...ing-Calculator to determine what adjustments you need to make to a W-4, or have SSA withhold some amount from your benefit payment.
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Old 02-19-2016, 11:20 AM
 
Location: rhode island
33 posts, read 22,807 times
Reputation: 42
thanks to all your info has been great, retirement should be less confusing lol
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Old 02-19-2016, 12:15 PM
 
Location: Mount Airy, Maryland
10,467 posts, read 5,935,374 times
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Quote:
Originally Posted by reed303 View Post
You won't add the whole $27K. The amount of SS benefits that you add to other income is based on a sliding scale from 0% to 85%, depending on the amount of other income. The IRS has a worksheet on page 16 of https://www.irs.gov/pub/irs-pdf/p915.pdf that is what you need to use to arrive at the amount you add to other income.

Using that amount, along with other information, you could then use the IRS on-line Withholding Calculator at https://www.irs.gov/Individuals/IRS-...ing-Calculator to determine what adjustments you need to make to a W-4, or have SSA withhold some amount from your benefit payment.
I was always under the impression that SS benefits are only taxed at high incomes. In the IRS link it references base amounts for a couple for additional income outside of SS at only $32,000. Is that true? That means any outside income, pensions IRA withdraws etc , totaling over $32,000 will kick in a tax on SS?

Sorry if this is a dumb question, I've honestly never looked into this before.
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Old 02-19-2016, 12:24 PM
 
71,700 posts, read 71,801,099 times
Reputation: 49262
yes , the taxes on ss really do start quite low . it can be more of a problem for those with lower incomes who are right at the borderline take an extra thousand bucks out of an ira and you can lose 48% of ii to taxes if you go over the limit

Last edited by mathjak107; 02-19-2016 at 12:35 PM..
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Old 02-19-2016, 02:49 PM
 
Location: Mount Airy, Maryland
10,467 posts, read 5,935,374 times
Reputation: 16170
Well this is certainly bad news. And it only reinforces the idea to take SS later so you won't set yourself up for a tax bill by having other income to cover the shortage of your early SS check.
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Old 02-19-2016, 03:06 PM
 
71,700 posts, read 71,801,099 times
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not really . In this case you would have rmd's and a bigger ss check perhaps making it even more painful . each case will be different . what we will spend down delaying ss won't make a dent in our rmd's
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Old 02-19-2016, 03:13 PM
 
Location: RVA
2,172 posts, read 1,268,333 times
Reputation: 4492
The Infamous Tax Torpedoe. There are all kinds of online calculators that illustrate the issue. If you want to live on any amount near your SS plus $27k, plus or minus, the consequences of withdrawing form tax deferred to add to taxable income are monstrous. You really want to be well below or well above those numbers, or literally most all your savings goes right to the IRS. Its a senselessly stupid inflexible set of rules. Unfortunately, most people don't find out about it until they start getting RMDs and half of that amount is suddenly due in taxes, and there is literally very little recourse.
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Old 02-19-2016, 03:55 PM
 
Location: NC
6,569 posts, read 7,991,101 times
Reputation: 13466
And in the category of another dumb question...is there any strategy to diminish this problem just before you take SS or need RMDs? For example, the year you are 69 could you take a pile of money out of your IRA to hold you over for the 'extra' you would need for the next few years?
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