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Old 01-05-2018, 05:19 PM
 
Location: R.I.
991 posts, read 611,856 times
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Thanks Mathjak and Perry for your clarifications.
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Old 01-06-2018, 02:40 AM
 
72,112 posts, read 72,094,203 times
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Quote:
Originally Posted by Perryinva View Post
Nightengale, your income only affects the months you are working AND collecting SS. It is not a yearly comparison. So if you wait until August to collect, it makes no difference what you earned in Jan - July.
what is confusing is the 1 st year rules not when you are 65 .

i have no clue what to expect .

according to the ss website the first year has no earnings limit . but once you file they say you are only entitled to a check in the months you earn 1410 or less .

so according to that if you filed in sep , and you earn 1411 sept ,1411 oct ,1411 nov ,500.00 dec and give back 3 out of 4 checks for being over a buck .

a form i got from ss in october asked me to check off the months i thought i would earn more than 1410 so they could adjust my payments .

there was no other questions pertaining to how much you actually earned when you went over .

so it appears there is no limit in effect , only if you went over 1410 or not .

but other things i read say the amount is prorated so even if it was like my example as long as it did not come to 4 x 1410 which is 5640.00 you are okay .

so far i received nothing from ss saying they were taking back any checks in january ,so i have no idea what to expect since for 2 months i earned more than 1410.00 .

don't go by the numbers since the earning limit was lower when this article came out but unlike the ss website this says it is not just 1410 a month first year it is prorated .
-----------------------------------------------------------------------------------------------------------------------
Special rule for the year you retire

Suppose you stop working full-time during a calendar year, say in July, while you're age 62, 63, 64 or 65 (all below your FRA) and you start Social Security benefits. The earnings test only applies to any wages or self-employment you earn after you retire and begin receiving Social Security income; your earnings in the months before your retirement don't count toward the earnings test. The annual threshold amount will be prorated to reflect just the months after you started your Social Security income; for example, if you retire mid-year in 2013, the threshold that would apply to you would be half of $15,120.



on the other hand ss website says :

Some people who retire in mid-year have already earned more than their yearly earnings limit. That is why we have a special rule that applies to earnings for one year, usually the first year of retirement.
The special rule lets us pay a full Social Security check for any whole month we consider you retired, regardless of your yearly earnings. If you will
Be under full retirement age for all of 2017, you are considered retired in any month that your earnings are $1,410 or less and you did not perform substantial services in self employment.
Reach full retirement age in 2017, you are considered retired in any month that your earnings are $3,740 or less and you did not perform substantial services in self-employment.



what is interesting though is the ss website uses the words FULL ---
' The special rule lets us pay a FULL Social Security check for any whole month we consider you retired, regardless of your yearly earnings. "

that says to me if you go over 1410 x 4 months you may not lose the whole check . but i have no idea what to expect
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Old 01-06-2018, 07:13 AM
 
Location: RVA
2,177 posts, read 1,276,583 times
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Quote:
Originally Posted by MadManofBethesda View Post
You act like that's a big change. They had roughly a $21k deduction (standard deduction + personal exemptions) before the new tax law.





Little difference? Really?! So if they have/had roughly $24k in itemized deductions, that means that they just lost $8k in deductions due to the loss of their personal exemptions. So they've gone from $32k in deductions from their gross income to $24k in deductions.

I would say having to pay taxes on an additional $8k in income could be fairly significant to some. Not to mention that having an additional $8k in taxable income could affect the taxability of their Social Security benefit,
Good points. Since I have always itemized, I didn’t realize that the combined deduction and exemption had crept up that high. Itemizers always got the exemption plus deductions, so it seemed a bigger gap. However, I was referring to the poster that implied that the new tax laws benefited more retirees by easing concern for the Tax Torpedo liability. I was pointing out it still being a concern, as high taxes are still there. In overall taxes, for non itemizing MFJ, the combination of the 3% lower bracket rates plus the $3k gain in deductions are a net win. The $10k limit on state tax (income and personal prop) and loss of the exemption couple to really suck for mortage and high property tax owners, and easily negate the 3% bracket reduction. As MJ said, the tristate, DC, NE and Calif taxpayers are the biggest losers. Coincidence? I doubt it. My own personal will be a wash.

Last edited by Perryinva; 01-06-2018 at 08:19 AM..
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Old 01-06-2018, 09:02 AM
 
6,919 posts, read 7,324,986 times
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^^ A friend who is a high income earner (seven figures) is already talking about leaving NYC....all for no income tax states.
Funny, how this native Californian is NOT thinking about going back there.
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Old 02-09-2018, 11:42 PM
 
6,731 posts, read 3,787,331 times
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Quote:
Originally Posted by Perryinva View Post
To the OPs question, as MJ said, it really depends on many things, and Iíll add for instance, whether Year B is because of working until then or living off savings. This topic has been discussed many times. It is called the Tax Torpedo. Just google it. As has been stated many times, SS is actuarially neutral, based on the entire population. If you have good reason to believe you are going to live longer than the average populous, and are concerned about survivor benefits then Year B is better. If you have little savings and or expect a shorter life, then Year A is better. There is a pretty fair income gap between no taxed SS and taxed SS, but regardless of whether taxed or not, getting more and being taxed on it still always nets more income. The question is, does having lower income allow for more low cost subsidized services that negate the gain in net income from waiting. Typically not.

I donít know anyone that wants less net income and pay no taxes. I know Iíd much rather be in the 33% bracket (Iím not and never will) and pay a crapload of taxes than be in the lower 15% bracket and have tax free SS (Iím not and never will) .
Well, my understanding is that you get paid the same amount of money in Social Security, assuming in both instances you live to the same age. The reason the amount is larger when you delay, is because it's that same amt of money divided by fewer months.

So the AMOUNT you get in Social Security is the same. But if it is taxed, you stand to lose maybe 10% of it every year....for the rest of your life. That's a lot of money.

So it's possible that a person taking it early and getting less annually would end up getting MORE money from SS because of not having to pay taxes.

Of course, if you STILL have to pay taxes on it, even if you take SS early, then I suppose it doesn't matter. The income level is pretty low for the SS tax to kick in.

It seems wrong to tax Social Security twice. I mean...that FICA tax money was already taxed, when you earned it.
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Old 02-10-2018, 12:04 AM
 
6,731 posts, read 3,787,331 times
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Quote:
Originally Posted by GeoffD View Post
The new tax code changes the tax torpedo retirement math. Pretty much all retirees will be in the 12% bracket since it extends up to a bit more than $100K AGI (married). Tax avoidance strategies when you're in the 12% bracket are mostly a waste of time. It's not much of a "torpedo" when it's 10% of your Social Security check. Previously, it was pretty easy for the tax torpedo to be 20% of your Social Security check if you had $500K in your 401(k) account because the RMDs pushed you into the 25% bracket.
The new tax brackets for 2018 are:

Rate Individuals Married Filing Jointly
12% $9,526 to $38,700 $19,051 to $77,400
22% 38,701 to $82,500 $77,401 to $165,000
24% $82,501 to $157,500 $165,001 to $315,000
32% $157,501 to $200,000 $315,001 to $400,000

So someone in the $100k income range is in the 24% bracket (individual).

I'm in the 22% bracket, which is quite a chunk o' change, esp considering it's every year for the rest of my life. If it can be avoided, that would be best. (The amt of Social Security one receives is the same, no matter when he starts receiving it, is my understanding. So it's really the taxes that make a big difference.)

I think I've already delayed too long to avoid taxes on the SS. I'll have to see. And I do have some control over my personal account withdrawal income. However, as you say, it might be better to withdraw from my 401k earlier, rather than later, to avoid being pushed into a higher bracket.
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Old 02-10-2018, 03:39 AM
 
6,919 posts, read 7,324,986 times
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Interesting question.
Just wanted to say lots of good info and some things to think about here.

I've thought about the tax torpedo in general.
But never really, really asked and explored the details and nuances of the OP's exact question.

I've thought about delaying Soc. Sec. -- AND - -getting money into a Roth to lower the RMDs.
But not really taking Soc Sec -- sooner to avoid taxes.
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Old 02-10-2018, 08:02 AM
 
6,731 posts, read 3,787,331 times
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Quote:
Originally Posted by Perryinva View Post
While I agree with your premise, it doesnít change it that much for many, especially if you itemized anyway. The gain on the actual bracket is only 3%. The majority of the shift is for those MFJ that never had enough to itemize, and now have a 24k deduction. If you already itemized close to that amount, there is little difference. The whole Torpedoe is really about a threshold where the RMDs make your SS go from untaxed to 85% taxed, coupled with that increase dragging you to the next bracket. All that is still valid if your RMDs are too large. But your premise is correct, in that the standard deduction will most likely eliminate a lot more people from the spectre of the tax Torpedo because of the extra headroom. But remember that same circumstance also will drag some people that had a higher income that their SS would always be 85% taxed, to a level where untaxed SS at a more comfortable net income is now possible.

10% tax of 85% of our SS when I plan to collect will still be over $4500. That is significant.
Not sure I understand that. AGI doesn't include any deductions.
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Old 02-10-2018, 08:04 AM
 
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magi includes very few allowed deductions , certainly not the deductions we think of when we think in terms of deductions .
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Old 02-10-2018, 10:12 AM
 
29,892 posts, read 34,951,892 times
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Quote:
Originally Posted by JRR View Post
Darn, here I thought I was doing the right thing by waiting until 70 for my increased benefits and instead, filing for spousal benefits at 66. So I guess that $1034 a month that I get for waiting until 70 doesn't mean much. I had the crazy idea that it would be good to do it that way so that either me or my spouse (whichever lives the longest) would have the increased benefits for their entire life.

Oh well, live and learn. I have the horrible habit of not living my life always waiting for the possible shoe to drop (early death or government reducing/stopping my social security). I guess I need to learn to be more negative in my outlook.
Bada Bing!
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