income tax on social security benefit

[renferme]

Just read Scott Burns - column saying that you have to pay income tax on social security if one half the ss benefit plus other income exceeds $25,000.
My guess is that more are paying income taxes than are not paying.
Especially on this board.
Doesn't seem to make sense to me that the Feds give you money and then you have to return it.
Hypothetical question: wife works and husband is drawing social security and pension. Is it better to file separately or jointly ?
Maybe the answer is "it depends", but thought I'd throw it out for discussion.
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[Nords]

Hypothetical question: wife works and husband is drawing social security and pension. Is it better to file separately or jointly ?
Maybe the answer is "it depends", but thought I'd throw it out for discussion.

Boy does it ever. If you're filing separately that greatly confuses the situation with itemizing deductions, especially rental real estate losses.

 

[renferme]

Nords, by the time my ss kicks in, the house will be paid for, and we won't be able to itemize. (no rental property here).

 

[Nords]

Nords, by the time my ss kicks in, the house will be paid for, and we won't be able to itemize. (no rental property here).

Not a problem then. But I'm sure there are plenty of minefields in the "joint vs separate" filing decision.

Best answer would be for everyone to plug their own numbers into the tax software and compare between the two.

 

[Gail]

Just read Scott Burns - column saying that you have to pay income tax on social security if one half the ss benefit plus other income exceeds $25,000.

.

The $25,000 is if you're single, a qualifying widow or widower, or lived apart from your spouse for the entire year. If you're married, you are allowed $32,000 instead of $25,000. However, if you're married and live with your spouse at any time during the year and use the filing status "Married Filing Separately", then the amount you are allowed is -0-.

 

[OAG]

That is why I say you can discount SS by at least 25% - They pay you $10,000 you only see about $7,500. Remember you GET an amount LESS your MEDICARE B Premium so right off the bat you are down that amount $93.50 X 12 and if married it is X 24. The MFJ number of $32,000 is the 50% taxable number then you do the next calculation (which is a tad more complicated) to see if another 35% is taxed. Last year we could not itemize so we paid on the full 85% (Plus MEDICARE Part B). This year we will itemize only because we will pay both the 2006 and 2007 RE Taxes to get on Schedule A (no mortgage). Alternate years will be the full 85% and the others a tad less. So last year we paid 24% +/- of the benefit back to the govenment either as Medicare Part B or income taxes.

For MFJ with a pension in excess of $32,000 you WILL ALWAYS pay taxes on at least 50% of the benefit AND that DOES NOT included the MC Pt B Preimums which they deduct before paying you but it is part of the GROSS Benefit and subject to the income TAX. That is why I think they actually stopped at a maximum of 85%, or you could have been paying taxes on the part B premiums.

 

[LOL!]

.... Last year we could not itemize so we paid the full 85% (Plus MEDICARE Part B). This year we will itemize only because we will pay both the 2006 and 2007 RE Taxes to get on Schedule A (no mortgage). So we paid 24% +/- of the benefit back to the govenment either as Medicare Part B or income taxes.

Uh, you hopefully didn't pay 85% tax, but you included 85% of your SS income in your AGI?

 

[OAG]

LOL correct; see my edit to clarify.

 

[FIRE'd@51]

Couple of questions for you OAG

(1) If you itemize, can you deduct the Medicare Part B premium?

(2) How about the Medigap Supplimental - is that deductible?

 

[OAG]

Fire'd@51: 1. Medicare premiums ARE deductable, and, 2. Medigap or other medical insurance IS deductable. Of course both are subject to the 7.5% of AGI limit (medical insurance and other medical expenses ABOVE 7.5% of AGI result in a deduction).

 

[mickeyd]

Doesn't seem to make sense to me that the Feds give you money and then you have to return it.

Don't despair, they will soon be working on a way to not even give SS to you in the first place. That way you will not have to return it.

Re: 85% ~ The reason that it is 85% is that it gives future members of Congress the pleasure opportunity to steal tax the other 15%.