Social Security?

[Carta]

Once you receive SS; is the amount taxed? Thx

 

[Passepartout]

Yes. If your income is high enough you will pay tax on it. Mine isn't.

Jim

 

[MichaelColey]

Probably, if you have other income:

http://www.irs.gov/newsroom/article/0,,id=179091,00.html

 

[Conan]

You will have to pay federal taxes on your Social Security benefits if you file a federal tax return as an individual and your total income is more than $25,000. If you file a joint return, you will have to pay taxes if you and your spouse have a total income of more than $32,000.

Use the Internal Revenue Service (IRS) Notice 703 shown on the back of the Social Security Benefit Statement, SSA Form 1099, to determine if any of your benefits may be taxable.

Notice 703:
http://www.irs.gov/pub/irs-pdf/n703.pdf

 

[suzanne]

Depending on your annual income you may or may not have to pay tax on it. You can ask SSI to withhold Federal taxes each month so that you don't have to worry about sticker shock ignore: ) at tax time. DH and I both have taxes withheld. His Brother-in-law didn't and had to pay $3000.00 last year in additional taxes. He changed it real fast to have $$ withheld. There is a form that you can download and use to figure out how much if any of your SSI is taxable on IRS website.

Suzanne

 

[Carta]

In other words, my SS won't be taxed every month like a weekly job would be taxed? I just pay taxes at the end the year, if needed,correct? Thx again to all u Tuggers

 

[Larry]

Depending on your annual income you may or may not have to pay tax on it. You can ask SSI to withhold Federal taxes each month so that you don't have to worry about sticker shock ignore: ) at tax time. DH and I both have taxes withheld. His Brother-in-law didn't and had to pay $3000.00 last year in additional taxes. He changed it real fast to have $$ withheld. There is a form that you can download and use to figure out how much if any of your SSI is taxable on IRS website.

Suzanne

I also have taxes withheld from SSI so I don't have a large bill at tax time!!!

 

[geekette]

In other words, my SS won't be taxed every month like a weekly job would be taxed? I just pay taxes at the end the year, if needed,correct? Thx again to all u Tuggers

Just be careful - not totally sure on teh rule, but if you will owe more than $1000 in taxes, you will need to pay estimated. I believe you can pay that by Jan 15th or so without a problem.

Bottom line, keep track of your liability.

 

[bogey21]

Just be careful - not totally sure on the rule, but if you will owe more than $1000 in taxes, you will need to pay estimated.

I have never bothered with Quarterly estimates. I have found it simpler just to pay the penalty and interest charges for not paying Quarterly. I have done this for about 40 years with no problems. The IRS seems happy just getting their money!

George

 

[Carta]

I have never bothered with Quarterly estimates. I have found it simpler just to pay the penalty and interest charges for not paying Quarterly. I have done this for about 40 years with no problems. The IRS seems happy just getting their money!

George

===========================
George, Ur telling me you've been collecting SS for 40 years? Wow!!!!!!!!!!!!! DAMN, You're old...lol... I hope I don't live that long..

 

[Dave M]

Most people who owe tax and don't have regular tax withholding would be better advised to make quarterly estimated tax payments to avoid underpayment penalties for failure to pay the tax ratably over the year. Although the current IRS penalty rate is only 3% of the underpaid tax, that's a lot more than most of us can earn on our investments in these days of low interest rates and a generally flat stock market - and the penalty is not deductible.

Thus, if you are earning interest at (for example) 1% and the interest is taxable, you would be a loser by paying a 3% nondeductible penalty.

 

[HtownRose]

IRA Required Minimum Distributions start at age 70 & a half, & these count as income so that amount added to your SS income can make you hit the taxable threshold if you've saved a lot in your 401k over your working years, &/or inherit a large IRA.

This is one reason why Roth IRAs are so attractive to many.

I plan to "Rothify" enough of my IRA before I turn 70 & a half that it won't be an issue...if my $ lasts that long!

 

[bogey21]

Thus, if you are earning interest at (for example) 1% and the interest is taxable, you would be a loser by paying a 3% nondeductible penalty.

But if you have to borrow money to pay the taxes, the IRS penalty and interest can be a better deal.

George

 

[geekette]

But if you have to borrow money to pay the taxes, the IRS penalty and interest can be a better deal.

George

If the money was made to owe the tax on, a loan should not be necessary. Unless one neglected to consider that it wasn't going to be all their money when they got it. Uncle Sam always has his hand out.

Of course, people need to pay the mortgage, put food on the table and gas in the car and that's a squeeze if you're underemployed or unemployed, and not a given that it's a breeze if you are employed. Waiting for Uncle Sam to take his share last could be a necessity for some. In that case, it probably is a better deal.

I fear the IRS more than anything else (including death, spiders, and tornadoes) so while I may not put aside all that I should, I would make a halfa$$ attempt to pony up at least something quarterly, and if not possible financially, by Jan deadline.

 

[isisdave]

Some states tax Social Security too, but not Pennsylvania.

 

[radmoo]

Just thinking out loud here. . . you know those wonderful pensions given to our Congressional leaders? the folks who vote on SS and medicare but have a plan of their own? Do THEY pay taxes on their retirement? Just wondering . .

 

[Mel]

Pensions are taxable income, so yes!

The best option is to have taxes withheld when possible, rather than making quarterly payments. That way you nexer "see" the money. Quarterly payments are best used when withholding isn't an option, such as with self employment.

 

[IngridN]

Pensions are taxable income, so yes!

The best option is to have taxes withheld when possible, rather than making quarterly payments. That way you nexer "see" the money. Quarterly payments are best used when withholding isn't an option, such as with self employment.

I have to disagree. I much prefer the quarterly payments. That way I don't have to re-adjust my withholdings each year. I simply calculate my estimated taxes each year. As long as my penalty doesn't exceed $100, I'm happy. In the past 10-15 years, I've incurred penalties twice...$12 and $62...works for me.

Ingrid

 

[Mel]

That's fine for those with the disciple to make the calculation and follow through on the payments. But most people are better of with withholding. If done properly, withholding doesn't need to be adjusted each year.

 

[Carta]

Just got great info from SS agent... First off, I'll be 62 in Oct.; and plan to cash-in @ 62.. The agent told me i should apply 3 mos. b4 turning 62.. She also told me the amount i would get if i applied at ages: 63 64 65 or 66.... Not to mention, "the day" my first check would arrive...Now I know what to expect... No more mystery...

 

[IngridN]

It would in our case. And I agree, it's not for everyone...you must have the discipline. My philosophy, which our tax man and DH disagree with, is to write a check to the IRS on 4/15 as large as possible w/o incurring penalties. The tax man calculates our estimated payments to break even. I recalculate them to write the largest check possible on 4/15 and since I handle the finances, I rule .

Ingrid

 

[pgnewarkboy]

I have to disagree. I much prefer the quarterly payments. That way I don't have to re-adjust my withholdings each year. I simply calculate my estimated taxes each year. As long as my penalty doesn't exceed $100, I'm happy. In the past 10-15 years, I've incurred penalties twice...$12 and $62...works for me.

Ingrid

I basically agree. Quarterly payments are easy to do.

 

[susieq]

Just got great info from SS agent... First off, I'll be 62 in Oct.; and plan to cash-in @ 62.. The agent told me i should apply 3 mos. b4 turning 62.. She also told me the amount i would get if i applied at ages: 63 64 65 or 66.... Not to mention, "the day" my first check would arrive...Now I know what to expect... No more mystery...

DH turned 62 this past Oct., applied last July, didn't see a thing 'till last week.

 

[Jennie]

Social Security benefits may be non-taxable or partially taxable, depending on your total income from other sources.

Use the "Social Security Benefits Worksheet" in the Instructions for Form 1040 (PDF), page 26, to calculate your taxable amount.

 

[Mel]

As a tax preparer, I agree with them - you want to be as close to zero as possible. As a tax payer, I agree with you. Rather than have the IRS borrow your money interest free (which is what most of my clients do), why not borrow from them interest free?

But alas, few of my clients would be prepared to pay that bill on 4/15 (actualy 4/17 this year - thanks to "DC emancipation day"), and most look forward to that big refund. They don't have the discipline to throw what is now excess withholding into a savings account and leave it alone.

For those with discipline, I would follow your plan - calculate both amounts for the quarterly payments, send the IRS the smaller amount, and put the difference into a dedicated account. Pay the taxes on 4/15 and use any accrued interest or other remaining balance for a nice dinner.

As much as I agree in principle with the idea of emancipation day, I hate the timing. Last year I was looking forward to the tax season ending on Friday, but it went on until the 18th (Emancipation Day is the 16th, but was observed on the 15th). Now the 15th is a Sunday, moving tax day to the 16th, but that is a DC holiday, so I'm stuck in the office until the 17th, while the family will be on vacation all week - I get to join them on Wednesday! I get to work 12 hour days on Monday and Tuesday, but won't get overtime, because it's a short work week.

It would in our case. And I agree, it's not for everyone...you must have the discipline. My philosophy, which our tax man and DH disagree with, is to write a check to the IRS on 4/15 as large as possible w/o incurring penalties. The tax man calculates our estimated payments to break even. I recalculate them to write the largest check possible on 4/15 and since I handle the finances, I rule .

Ingrid