Social Security

[ratcity]

I am thinking of getting my Social Security at age 62. I will not be working so S/S and my wife income will be our income. Now I know that I will be taxed on my S/S along with my with income. Is there a way I can put some of my S/S into a retirement fund to save on tax's, like a Roth fund.

[paz]

I don't think SS income qualifies for investing into an IRA; but if your wife is working, you could create an IRA in her name and put in the max amount. Don't forget, money has to remain in a Roth IRA at least 5 years to grow tax exempt.

[GaryKD]

Hi ratcity,
paz has the right answer. There are different IRA choices. Consult with the institution you choose to hold the $s before you make the decision as to which IRA to use.

[Ray,IN]

A side note to your SS questions is: If you are a military veteran (some active duty), you may qualify for an increase in SS benefits. Information on the SS website.

[paz]

The other thing I forgot to mention about a Roth IRA is it won't decrease your current tax burden. Money goes into a Roth IRA after tax. The growth is tax exempt, so you will pay no additional taxes when you take the money out in the future (after a minimum of 5 years).

A 401k or a traditional IRA is tax deferred, so you will pay lower taxes now. You will, however, have to pay taxes on your original investment and the growth when you take the money out later. The advantage is both you and your wife will both be retired later, and your income will likely be lower. The lower income will probably place you in a lower tax bracket, thus reducing the overall taxes on the money in the IRA.

[RichR]

SS is not taxed unless you make more than a set amount,if your not working then you don't have to worry.Thats your income not your wifes.

[GaryKD]

Hi RichR,

I have no W2 income. My SS is taxed as ordinary income. Can you provide additional details about your post?

[RichR]

I have been drawing my SS for three years and have not paid tax on it yet.I do not remember the most that can be earned-it would be best to review this at your local SS office.As a note I do have to pay taxes but only on my regulas retirement.SS sends out a anual 1099R at tax time and is not taxed as w2.

[wingnut60]

As far as I know, all SS benefits are taxable--mine are, and my mother's were. You may not owe if SS is only income and it isn't high enough. As Gary said--expand a little on why your SS isn't taxable--something we don't know about?
Thanks,
Joe

[Jim Stewart]

From the Social Security Web Site

Some people have to pay federal income taxes on their Social Security benefits. This usually happens only if you have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return) in addition to your benefits.
No one pays federal income tax on more than 85 percent of his or her 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.

*Note:

Your adjusted gross income
+ Nontaxable interest
+ ½ of your Social Security benefits
= Your "combined income"

[Tincup]

I'm like RichR, I've been drawing SS for 4 years plus my pension from AT&T, the SS is NOT taxed but the pension is.

[wingnut60]

Looks like there is a lot for me to learn about my SS--just started getting it in Feb '09, but I am still employed full time. This will change in May--finally to retire.
Joe

[hamguy]

Quote:

Originally Posted by Tincup I'm like RichR, I've been drawing SS for 4 years plus my pension from AT&T, the SS is NOT taxed but the pension is.

My SSI is taxed as normal income but dependent on how much you make otherwise, and a bunch of other factors.

[Superslif]

Quote:

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.

When I start drawing on my SS, but work a very minimal job would any of my SS be taxed. In above example "between 32K & 44K" it says 50% of SS is taxed. So can I assume anything I make under 32K will not bump my SS into a taxing event? Also will my union pension count towards the 32K threshold?