Tax on Social Security
I’m single with no dependents. I turn 70 early October and I’ve yet to apply for Social Security. I will definitely apply ASAP. Can you confirm what I’ve read that when I apply I should request for benefits to start in October, and that the first payment will come in November? Also, once I submit my AGI, is that and the tax % I pay locked in for the rest of my life, or, does the Social Security Administration make a re-evaluation every year, as they do for Medicare? THANK YOU!
BTW: I read your column every Sunday in the Chicago Tribune and I’d love to hear you more often on WCPT Chicago’s Progressive Talk!
Terry Says
Thanks for your note. OK, DEFINITELY tell them you do NOT want to receive a check until AFTER your 70th birthday — and yes, that check will come a month in arrears. Don’t fall for any pitches from SS to start now and they’ll give you a 6-month extra check in arrears! (Read about that in my upcoming book!)
Your Social Security benefits will be taxable depending on what other income you have. Social Security taxes “provisional income” –your adjusted gross income plus other income such as from tax-free municipal bonds.
Here’s a clip on the specific taxation from the SS website. (Also note that if you will owe taxes each year, you should probably make quarterly tax estimate payments!)
https://www.ssa.gov/benefits/retirement/planner/taxes.html
You will pay tax on only 85 percent of your Social Security benefits, based on Internal Revenue Service (IRS) rules. If you:
file a federal tax return as an “individual” and your combined income* is
between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
more than $34,000, up to 85 percent of your benefits may be taxable.
file a joint return, and you and your spouse have a combined income* that is
between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits.
more than $44,000, up to 85 percent of your benefits may be taxable.
are married and file a separate tax return, you probably will pay taxes on your benefits.
Your adjusted gross income
+ Nontaxable interest
+ ½ of your Social Security benefits
= Your “combined income”
Each January, you will receive a Social Security Benefit Statement (Form SSA-1099) showing the amount of benefits you received in the previous year. You can use this Benefit Statement when you complete your federal income tax return to find out if your benefits are subject to tax.
