Reinvesting Social Security Income

[Form8582]

In 2019, being at full retirement age, I started collecting my social security income- mainly because I was tired of writing out a check to medicare. Anyway-

After medicare is taken from my social security, the remainder goes into a checking account. I have not touched the little amount deposited each month.

I heard there was a way to reinvest the social security income back into a retirement account. Is this true? How can I get more information?

I think I also read that only a small percentage of social security income can be withheld for taxes....I'd just like to let them hold it all for taxes... instead of depositing it in a checking account (after the medicare payment).... because they will get it all back at tax time anyway.

IS the percentage one can have withheld from the social security income based on the entire amount collected each month...or on the remainder after medicare is taken out?

[dmertz]

Social Security income is not compensation needed to support making a retirement contribution.  You can only make a retirement contribution if you have compensation from employment, generally either some amount in box 1 of a W-2 minus any amount in box 11 or net profit from self employment.

No, you can't have 100% of your Social Security benefits withheld for taxes.  Tax withholding is calculated on the amount of the benefit payment at a rate of 0%, 7%, 10%, 12% or 22% only.  I would expect this to be on the gross amount before subtracting Medicare payments, but I don't have specific knowledge of that.

[Form8582]

Thank you....

Do you know if there is any way NOT to pay taxes on the medicare they take out?

Social security is putting me into the next tax bracket. Can I open some sort of health fund if I'm totally retired to pay for medicare the other medical bills...with pre-tax money (ie: social security payments?)

[dmertz]

Amounts that are deducted from your benefits as Medicare payments can be reported on Schedule A [not on Schedule C as I originally mistakenly typed] as itemized medical expenses,  However, only medical expenses in excess of 10% of AGI are deductible and to benefit from the deduction your total itemized deductions need to exceed your standard deduction, otherwise you'll just use the standard deduction.

[dmertz]

I corrected my typo above which originally indicated that itemized deductions go on Schedule C.  Itemized deductions are reported on Schedule A.

[Form8582]

Can the social security payment be given back in full to the social security department?...I heard it can be done  once...

but if so, is there a time limit? 

Is there a particular form to fill out? 

How would I account for it on my taxes...2019 will be my first time to file with social security.

[dmertz]

SSA has web pages discussing withdrawal of your application or suspension of benefits:

https://www.ssa.gov/planners/retire/withdrawal.html

https://www.ssa.gov/planners/retire/suspend.html

[VolvoGirl]

A couple of points.

1.  Medicare can be deducted against Schedule C self employment income.  Self-employed health insurance deduction goes on Form 1040 schedule 1 line 29, as long as the expense is not greater than your net self-employment income. If it does exceed your net self-employment income it gets split automatically. An amount equal to your net self-employment income goes on Form 1040 line 29, and the remainder gets added in to medical expenses on Schedule A.

Medicare plan B payments are qualified as Self-employed medical insurance premiums and should be entered under Business instead of in the Social Security Benefits entry area.

2.  Social Security is not 100% taxable.  It is a calculation.

Up to 85% of Social Security becomes taxable when all your other income plus 1/2 your social security, reaches:

Married Filing Jointly: $32,000

Single or head of household: $25,000

Married Filing Separately: 0

[VolvoGirl]

And regarding the withholding.  Apparently the withholding is on the net of SS-Medicare.

I looked in my SS file and the 15% withholding is on the net SS-Medicare.  Wonder why they do it that way?  Was checking for this post,

https://ttlc.intuit.com/community/retirement/discussion/withholding-on-social-security-benefit-when-...