How much SS benefit is taxable when collecting SS at Full retirement age but also Working & receiving an income

[JAF1080]

I understand there is no limit on how much you can earn and still receive full benefits after full retirement age.

I don't understand how much of my SS benefit I am receiving will be taxable - all of it or a percentage?

Also, if I am earning an income from an employer and SS tax is being taken out of my pay, does the SS benefit  I am already receiving get increased at some point by what is being held out of my pay?

Thank you.

[xmasbaby0]

TAX ON SOCIAL SECURITY

Up to 85% of your Social Security benefits can be taxable on your federal tax return.  There is no age limit for having to pay taxes on Social Security benefits if you have other sources of income along with the SS benefits.  When you have other income such as earnings from continuing to work, investment income, pensions, etc. up to 85% of your SS can be taxable. 

 What confuses people about this is that before you reach full retirement age, if you continue working while drawing SS, your benefits can be reduced if you earn over a certain limit. (For 2019 it was $17,640— for 2020 it was $18,240; for 2021 it was  $18,960.  For 2022 it was  $19,560  —  for 2023 $21,240)

After full retirement age, no matter how much you continue to earn, your benefits are not reduced by your earnings; your employer will still have to withhold for Social Security and Medicare.  If you work as an independent contractor then you will pay self-employment tax for Social Security and Medicare.

To see how much of your Social Security was taxable, look at lines 6a and 6b of your 2022 Form 1040

https://ttlc.intuit.com/questions/1899144-is-my-social-security-income-taxable

https://www.irs.gov/help/ita/are-my-social-security-or-railroad-retirement-tier-i-benefits-taxable

You need to file a federal return if half your Social Security plus your other income is $25,000 when filing single or head of household, or $32,000 when filing married filing jointly, $0 if you are filing married filing separately.

Some additional information:  There are 11 states that tax Social Security—Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont  These states offer varying degrees of income exemptions, but two mirror the federal tax schedule: MN and VT.

[Jackstar221]

Here is an article that provides the percentages of social security benefits that are taxable to you:

https://www.ssa.gov/benefits/retirement/planner/taxes.html 

Regarding your question about SS tax being taken out of your pay:

Your benefits may increase when you work:

As long as you continue to work, even if you are receiving benefits, you will continue to pay Social Security taxes on your earnings. However, the social security administration will check your record every year to see whether the additional earnings you had will increase your monthly benefit.

Thank you,

John

CPA