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...will my eventual Social Security benefits be reduced based on my government pension benefit? Or do GPO and WEP apply only to people earning pensions at jobs that do not require them to contribute to Social Security?
I know that these answers are not necessarily true in all cases, because I have retired with a local government pension, for which I paid social security during all of my working career. I signed up for SS in April and found that I have to pay a substantial amount of taxes on my SS benefits, equivalent to 25% of my SS.
Determining whether or not you have to pay taxes on your Social Security benefits really comes down to two factors: 1) your tax filing status, and 2) the amount of your "combined" income. Generally speaking though, you will not have to pay any taxes on your Social Security benefits at all, if that is your only source of income.
The rule being individuals will not have to pay if your "combined" income is less than $25,000 filing as an individual, or $32,000 as a joint filer. If your "combined" income is over that threshold, continue reading below to calculate exactly your combined income, and to determine at what rate you will be taxed at on your SS benefits, as well as how to receive a copy of your SSA-1099 form.
Adjusted Gross Income + Nontaxable Interest + Half of your Social Security benefits = Combined Income
I know that these answers are not necessarily true in all cases, because I have retired with a local government pension, for which I paid social security during all of my working career. I signed up for SS in April and found that I have to pay a substantial amount of taxes on my SS benefits, equivalent to 25% of my SS.
They are also withholding a $121.80 Medicare Insurance Premium from my SS payment every month.
Reed's answers are correct in all cases.
OP's original question is:
Quote:
If I earn a pension based on work for which I paid Social Security taxes......will my eventual Social Security benefits be reducedbased on my government pension benefit? Or do GPO and WEP apply only to people earning pensions at jobs that do not require them to contribute to Social Security?
OP is asking about the OFFSETS - GPO and WEP - to her SS benefit impacting people who have worked and/or receive benefits under SS AND also receive pension benefits from employment which paid into SS. Taxes have nothing to do with either offset or her question.
We've already got many threads on this issue, and one current discussion here
- which presumably is why this thread was started. OP's issue was clearly addressed on that thread and would have been better placed there.
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Fyi - we have tons of threads on taxation of social security and the tax torpedo - and how combined income - which threshold is very low - can trigger the tax. Again, not the subject of this thread.
Last edited by Ariadne22; 06-13-2016 at 12:25 PM..
OP's original question is:OP is asking about the OFFSETS - GPO and WEP - to her SS benefit impacting people who have worked and/or receive benefits under SS AND also receive pension benefits from employment which paid into SS. Taxes have nothing to do with either offset or her question.
We've already got many threads on this issue, and one current discussion here
- which presumably is why this thread was started. OP's issue was clearly addressed on that thread and would have been better placed there.
****
Fyi - we have tons of threads on taxation of social security and the tax torpedo - and how combined income - which threshold is very low - can trigger the tax. Again, not the subject of this thread.
Thank you for explaining that, I appreciate it. I was unclear on what the GPO and WEP was referring to.
However it appears to me that the answer to the first question is still Yes in many cases.
Quote:
Question 1: If I earn a pension based on work for which I paid Social Security taxes......will my eventual Social Security benefits be reduced based on my government pension benefit?
Answer: Yes, if your "combined" income is exceeds the threshold of $25,000 (single) or $35,000 (couple).
Thank you for explaining that, I appreciate it. I was unclear on what the GPO and WEP was referring to.
However it appears to me that the answer to the first question is still Yes in many cases.
Answer: Yes, if your "combined" income is exceeds the threshold of $25,000 (single) or $35,000 (couple).
Again, apples and oranges, given what the OP asked about. Taxation by the IRS has nothing to do with reduction or offset of benefits by SSA due to GPO or WEP.
Possibly except there would be less to be taxed if benefits were reduced by WEP or GPO.
Thank you for explaining that, I appreciate it. I was unclear on what the GPO and WEP was referring to.
However it appears to me that the answer to the first question is still Yes in many cases.
Answer: Yes, if your "combined" income is exceeds the threshold of $25,000 (single) or $35,000 (couple).
To segregate her first Q from the whole is to take the Q out of context. The question was never about OP's net SS benefit after taxes. It was about GPO/WEP offset to her SS benefits because of her govt pension.
Under GPO/WEP, SS beneficiary will actually receive a smaller SS benefit. This reduction is taken by the SSA before it pays the benefit. Whereas, income tax paid to the IRS on SS benefits after the benefit has been received is NOT a direct reduction of the SS benefit itself.
Further, there are many ways to reduce overall tax liability in retirement and perhaps reduce $$ of SS exposed to taxes - whereas there is no way to use tax sheltering techniques to reduce or circumvent the GPO/WEP offset.
In this case, the GPO/WEP offset does not affect OP at all, because her govt employer participates in SS.
Last edited by Ariadne22; 06-13-2016 at 04:56 PM..
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The issue is OFFSETS - not taxes
