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Sorry, no difference of opinion. There is only one opinion, GeoffD's. I simply used Taxcaster a few years ago, and I don't mean to be a snit, but just because that is how he understands the tax code, it is not fact. Just use Taxcaster, like anyone would before posting a statement, or question, and you will see that if your ONLY income is SS, to any amount currently paid out, federal tax is a big fat zero. (Assuming age 65 and up for larger standard deduction). If you have $80000 in just SS as your only MFJ source, tax is zero. In fact, you can have $11,000 in taxable income on top of $80000 SS and your federal tax would still be zero. At $12000 taxable income, it is a whopping $161. I had done that look up years ago, and just did it again. Still zero. DW and I will have about $70000 in SS if I collect at 70 as planned. If single and $50k is only source of income... big fat zero. It takes over $8k of taxable income to start paying federal tax. It is an important part of tax strategy.
Last edited by Perryinva; 05-17-2017 at 06:06 PM..
This might be little off this thread but I looked at my current SS statement and there was something that kinda blew me away. My difference in taking my SS now at 64 vs 66 is $350 per month (if my benefit does not increase). You multiple that out and it is $4200 per year and if God willing I can live until I'm 86 that is $84,000 more in those 20 years. SS really gives you lots of incentive to hold off collecting! I really need to figure out how late I want to go before starting to collect. The statement was and eye opener.
Sorry, no difference of opinion. There is only one opinion, GeoffD's. I simply used Taxcaster a few years ago, and I don't mean to be a snit, but just because that is how he understands the tax code, it is not fact. Just use Taxcaster, like anyone would before posting a statement, or question, and you will see that if your ONLY income is SS, to any amount currently paid out, federal tax is a big fat zero. (Assuming age 65 and up for larger standard deduction). If you have $80000 in just SS as your only MFJ source, tax is zero. In fact, you can have $11,000 in taxable income on top of $80000 SS and your federal tax would still be zero. At $12000 taxable income, it is a whopping $161. I had done that look up years ago, and just did it again. Still zero. DW and I will have about $70000 in SS if I collect at 70 as planned. If single and $50k is only source of income... big fat zero. It takes over $8k of taxable income to start paying federal tax. It is an important part of tax strategy.
I just ran through the Social Security benefits worksheet on page 30 of the 1040 instructions. I had it wrong. Line 2 says you take 50% of your Social Security 1099 form for the calculation. That's the first time I'd gone through it in that level of detail.
There's still an example where you'd have to pay tax on nothing but Social Security income. If you're married and you both receive the maximum possible defer-to-age-70 benefit, you're over $88K and hit the tax torpedo. I doubt there are many tax returns that look like that but it's certainly possible.
That $25K/$34K single; $32K/$44K married exemption isn't indexed to inflation. I'm 59. By the time I'm 70 and collecting, I'll certainly be hitting the tax torpedo on just my Social Security income. My statement says my Social Security income will be $44,136 if I defer to age 70. 11 years of COLA adjustments will certainly push it over $50K.
There's still an example where you'd have to pay tax on nothing but Social Security income. If you're married and you both receive the maximum possible defer-to-age-70 benefit, you're over $88K and hit the tax torpedo. I doubt there are many tax returns that look like that but it's certainly possible.
That $25K/$34K single; $32K/$44K married exemption isn't indexed to inflation. I'm 59. By the time I'm 70 and collecting, I'll certainly be hitting the tax torpedo on just my Social Security income. My statement says my Social Security income will be $44,136 if I defer to age 70. 11 years of COLA adjustments will certainly push it over $50K.
$88K of Social Security benefits on a joint return is zero tax liability. If there's no other income it takes nearly $130K of SS income before there's any tax liability. That's a lot of COLA, and keep in mind the standard deduction and personal exemption amounts are indexed, so that income threshold will go a bit up over time even if the combined income limits you mention are never changed.
How do you get no tax ? Half the 88k is taxable less the standard deduction and exemptions still leave a good portion taxable.
Once you go over you are not just taxed on the overage that goes over the limit, the entire ss is taxable from dollar 1 on either 50% or 85% of the entire amount less deductions and exemptions
Something is not correct i think. You are taxed from dollar one on either 50% or 85% less the deductions . It can't be correct for what ever reason.
It sounds like it treated it like disability which is not taxed. Once you go over 85% is added to your income. If there is no other income then that is your income. Pull out roughly 22k in deductions and you have 68k in taxable income. I don't believe the first 44k is tax free once you go over but who knows, i could be wrong.
Last edited by mathjak107; 05-18-2017 at 06:02 PM..
I found some interesting info but i can't link it on my nook.
It looks like you do get some credit . Up to 32k no tax . you would be taxed on .50 cents of every dollar from 32k up to 44k. Then taxed on .85 cents of every dollar. But that is only if you have no other income.
If you have any other income it gets combined with the social security and goes in the bucket first. So 10k from an ira would go in the bucket and actually now allow only 22k in social security to make it through the no tax zone since it combines with the ss.
It is pretty complex because you have 2 moving targets.
So if you took a 50k draw from your ira that would eat up the tax free portion of ss and the ss would be taxable.
I will post the link in the morning from my desktop
Last edited by mathjak107; 05-18-2017 at 06:21 PM..
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