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Old 02-04-2011, 12:33 PM
 
428 posts, read 1,607,680 times
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I've been doing my mom's taxes for a few years via TurboTax, so officially I don't really know what I'm doing. ;-)

She's a senior citizen, barely (70). She still works full-time for the city and earns a pretty good income for which the normal taxes are taken out. She just started receiving Social Security last year which looks to be counted as income and taxed as normal (if she wasn't also employed, would her SS income still be taxed?). She has mortgage interest and property taxes for her deductions.

Anyway, she ends up owing a fair amount each year and of course she's not happy about that. It would seem that the "system" is set up where senior citizens pay fewer taxes. My question is to those of you in a similar age and financial situation - do you end up owing? I told her maybe she should bring her records to a professional next year (she used to, but they just plugged in her numbers to TurboTax type software) and see if there is something major we're missing.
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Old 02-04-2011, 10:43 PM
 
Location: South Jordan, Utah
7,747 posts, read 8,173,378 times
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Many retired seniors pay very little in taxes as comarred to how much they make. I see eole with $25k a year in pensions, $40k (H &W) in SS, $10k in tax free divs, plus distributions from a taxable account that is barley taxable, pay very little. With just standard deductions they would pay about $1,500 TOTAL in Fed income taxes, not plus withholding, total tax bill.

A 35 year old couple with the same $75k in income would pay $6,800 in Fed tax and $4,100 is SS and Medi.

The more non-IRA money a senior has the less taxes and more income I can help them pay, sadly it is easy, yet not fair.
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Old 02-05-2011, 06:59 AM
 
Location: Los Angeles area
14,017 posts, read 19,414,712 times
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Default Taxation of Social Security retirement benefits

Whether or not you pay tax on your Social Security income depends on how much other income you have, at least at the federal level (states vary, with some not taxing it at all). Those who have very little other income will not be taxed on their Soc. Sec. at all by the IRS, while the maximum percentage of Soc. Sec. that can be taxable is 85%. If the salary of your mother's full-time job is half-way decent, she will probably pay federal taxes on the full 85% of her Soc. Sec.

If your mother doesn't want to owe money every year, she can ask her employer to withhold an additional amount from each paycheck.

I am a senior and I normally owe money to the IRS, despite having arranged to have additional amounts withheld from my pension. I could keep adjusting that amount every year to try to hit it on the button, but I find it to be a difficult moving target.
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Old 02-05-2011, 07:06 AM
 
92,365 posts, read 89,789,822 times
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if they get much money back it just means they planned their esimated or with-holding poorly. its not an indication of anything in ones financial life or situation other then poor figuring. ideally you should owe less then 10% of your tax bill. most may owe money because if you have taxable investments in funds there can be fairly large capital gains distributions with market gains. even though you didnt sell anything the gains are still taxable. that can effect how much social security is taxable.
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Old 02-05-2011, 08:47 AM
 
3,763 posts, read 11,638,130 times
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My father's pension is taxed as normal income, as is his SS distribution. Any capital gains - adds to that. So, yes, every year he ends up owing some. Now his medical deductions are nearly to the point of cancelling out his capital gains, so we're almost at breaking even with the taxes that are normally witheld from pension/ss. I assume the person who ways you should owe less than 10% of your tax bill is someone who has no "income" but only tax free distributions.

I don't think it was poor estate planning on my parents part - they'd be living very comfortably if not for the medical emergencies that require such an outlay on their part each year. If not for that - they'd be living quite comfortably on SS and pension, even while paying taxes.
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Old 02-05-2011, 08:57 AM
NCN
 
Location: NC/SC Border Patrol
21,148 posts, read 23,659,723 times
Reputation: 23387
Quote:
Originally Posted by Fields of Green View Post
I've been doing my mom's taxes for a few years via TurboTax, so officially I don't really know what I'm doing. ;-)

She's a senior citizen, barely (70). She still works full-time for the city and earns a pretty good income for which the normal taxes are taken out. She just started receiving Social Security last year which looks to be counted as income and taxed as normal (if she wasn't also employed, would her SS income still be taxed?). She has mortgage interest and property taxes for her deductions.

Anyway, she ends up owing a fair amount each year and of course she's not happy about that. It would seem that the "system" is set up where senior citizens pay fewer taxes. My question is to those of you in a similar age and financial situation - do you end up owing? I told her maybe she should bring her records to a professional next year (she used to, but they just plugged in her numbers to TurboTax type software) and see if there is something major we're missing.
She is paying at tax time because she probably did not add all her incomes together when she figured out how many taxes to withhold. Have her divide the amount she pays by 12 and have that amount taken out of her SS income since she evidently makes enough to live on with her other job.

We were in a position to have to do several tax forms a year, but I solved the problem by having more taxes withheld from my SS check. That is so much easier than having to have that lump sum at the end of the year and getting the letters threatening to charge us an extra amount.
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Old 02-05-2011, 10:02 AM
 
Location: Planet Eaarth
8,954 posts, read 19,232,397 times
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Due to my wife's small home business we have paid no income taxes at all. Don't know if that will be the case every year but for the last three it has!
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Old 02-12-2011, 08:24 PM
 
Location: San Diego CA
1,029 posts, read 2,273,138 times
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No, speaking for my Mom with Dementia. She has not owed taxes the past 2 years including this year. Prior to the past 2 years she always got a refund.
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Old 02-12-2011, 08:41 PM
 
48,507 posts, read 90,694,574 times
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Yep;I pay on 855 per cent of my social security which I thik is a good deal comapore to other income. No withholding is taken out of SS but you can adjust other withholding to compensate.Or better yet put it into a account that gets some interest for end of year.
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