Have you been searching “Do I pay taxes on social security after age 66” or “do you have to pay tax on social security“? If you have, then this article will help you to find those answers. Paying taxes on social security depends on a number of income factors that we will explore below.
To inquire about any benefits from Social Security, you will need to make a statement of your personal account that will state what benefits you have or what the benefits will be. It can also show you a list of contributions of your benefits which allows you to check for accuracy.
Simply go to http://www.socialsecurity.gov/myaccount/ in order to create a personal social security information site where it can track your earnings and even verify them each year to get an estimate of future benefits if you are working.
Do You Have To Pay Tax On Social Security?
Americans that are working in retirement, and are making an income when combined with Social security can complicate a tax return.
If you have managed to retire before your actual retirement age and have begun collecting Social security early, the benefits are subjected to a reduction for beginning early and as your earnings increase. The recipients will have to deal with taxes on some of their benefits if the income exceeds certain amounts.
Being an early retiree, you have to decide if you should begin getting benefits early. Social security benefits will be reduced if they are started before normal retirement age. If you work, then you are subjected to more reductions. Social security may reduce some of your benefits once you earn over $15,720 in a year. You will lose $1 for ever $2 over this amount. A higher limit will apply to your benefits once your reach full retirement age. If there are any months in the year of your normal retirement that the benefits are reduced more due to the income earned during your early retirement, then your benefits will be increased in later years to make up for the reduction due to those earnings.
If you have income in excess of the base amount
You will be subjected to a tax on 85% of those benefits. If this income exceeds the base amount of $32,000 for a single filer or $44,000 for a joint filer, at least 85% of the benefits will be subjected to tax. The tax rate will depend on your tax bracket but it can be no higher than 35%.
If you receive Social Security benefits and work
The work limit for these earnings are $1,310 a month or $15,720 a year. If you collect Social Security before your full retirement age of 66 or 67, your benefits will be reduced by $1 for ever $2 that you make over that limit.
In the year that you reach your full retirement age, your benefit will be reduced by $1 for ever $3 made above that limit.
Note: For retirees that make high income, the benefits that you receive will be taxed; but this is a separate issue from a direct reduction of your benefits.
Your Social Security benefits and taxes that you may need to pay
Social security payments are going to be the main income for most retirees. You will need to check for other income to ensure that your taxes will be at a minimum amount.
In order to estimate if you may owe taxes on your benefits, you will need to add your adjusted gross income, one-half of your benefits, and tax exempt interest. If you happen to be married and your joint income is less than $32,000, you will not be taxed on your benefits; but if your joint income is above $32,000 but below $44,000, then up to 50% of your benefits may be taxed. If you have an income over $44,000, then 85% of the social security benefits may be taxed. If you are single filer, then those amounts will be $25,000 – $34,000.
This tax does come as a surprise for most.
If you are receiving benefits, and want to have taxes taken out of your benefits, then go to http://www.ssa.gov/, and simply download the W-4V, which is a Voluntary Withholding Request. This form will give you a choice of holding 7, 10, 15, or 25% of your benefits. Sign the form and then mail it to your social security office, which you will find on your website.
After reaching age 66, you can earn any amount and still collect full benefits
In order to maximize the after tax income if you are single, or the head of household, you will want to keep your earned and unearned income as well as half of your social security benefits to under $25,000. If you are married, then you will want to keep the same figure under $32,000. This will keep your Social Security benefits from being taxed.
Once you reach the retirement age
Your benefits will not be reduced, but up to 85% of social security benefits can taxed if your income is above the base amount, which depends on if you file jointly or as single. In general, your benefits will be taxed up to 50% of 85% of the benefits.