Income allowed while receiving social security

[Machlan]

How much income can I make before having to return some of my social security benefits

[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 2017 that limit was $16,920 —for 2018 it was $17,040—for 2019 it was $17,640— for 2020 it is $18,240; for 2021 it is $18,960)  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.

To see how much of your Social Security was taxable, look at lines 6a and 6b of your 2020 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 13 states that tax Social Security—Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont, and West Virginia.  These states offer varying degrees of income exemptions, but four mirror the federal tax schedule: MN, ND,VT, and WV

[Opus 17]

There are two issues to think about.

1. If you retire before your "full retirement age" and then have income earned from working, your benefits will be reduced.  This is controlled by the Social Security Administration, not the IRS.  There is a page about it here. https://faq.ssa.gov/en-US/Topic/article/KA-01921

For 2021, the limit of money you can earn from working and not reduce your benefit is $18,960. 

Other taxable income, like investments or IRA withdrawals, do not reduce your benefit.  Only income from working reduces your benefit, and only if you are less than full retirement age.

2. At any time, your social security benefit may be taxable if you have any other taxable income.  This is controlled by the IRS and the tax laws.  This applies before and after full retirement, and with any kind of taxable income.  Your social security benefit will be taxable if half your benefit, plus your other income, is more than $25,000, or $32,000 if married filing jointly.

Bottom line is, if you take your social security benefit before your full retirement age, and you continue to work, you benefit will be reduced and taxed.  After full retirement age, your benefit can still be taxed but it won't be reduced.