I see similar questions to mine on this forum, but I am going to pose one any way.
My wife and I are filing jointly. She draws a salary from work with no other income. I am the opposite as I don't draw a salary (I am semi-retired) but I withdrew a "sizable" amount from a Life Insurance (actually, total withdrawal and I received a 1099-R that shows taxes withheld) and much smaller amount from an IRA (taxes paid also reported on it as per another 1099-R form). One of the IRAs (I had posted a question earlier on how to enter the amount there and got it solved) I withdrew from is a foreign IRA (and I paid zero taxes on as that is per international tax law between the U.S. and that country (no "double-taxation"). Only the IRS can levy a tax on income from that foreign IRA. On top of these amounts, I also started receiving Social Security benefits (a very low number as my the bulk of my employment took place overseas) but I did NOT pay any taxes on those benefits in advance (if there is a handy way to pay taxes for Social Security benefits in Tax Year 2022, I will need to look into).
Why is my IRA and Social Security income taxed at a higher rate than my wife's salary? My income is taxed at much higher rate than her salary.
Would appreciate insights into this !
Sincerely,
JJ
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When you file jointly your tax rate is determined by your adjusted gross income (AGI), not by the separate income amounts of your wife's salary and your IRA Social Security Income. The tax rates are indexed so that the higher your AGI is the higher your tax rate.
I realize that but I am surprised at the fact that the tax is higher for my portion of our family revenues which isn't a salary income but "merely" IRA + Social Security. Will need to look into how to avoid this next tax year as I am sure there is a way for me to pay taxes on Social Security going forward and thus have less to pay or even a refund.
Thanks!
JJ
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
You can have federal withholding taken out of your SS. Here is the form
Thanks VolvoGirl......used to see plenty of Volvos where I grew up.....
Best!
JJ
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