Taxing income after Full retirement age

[genek12]

 I am past the full retirement age now but still work 3 days a week for the City of Ste. Genevieve. I do maintenance for 75 apartments on the side and other jobs also. I always thought that once I was the FRA I could make all the money I wanted and it would not be taxed on that. I turned in my taxes and when I picked them up I had to pay over $1,000 in taxes! I never held anything out because I figured I would not owe anything. I would have been better off not working. ( I would not do that, I am not a freeloader) My tax guy said that I owe the money. Can you clarify.

Thank you,

Gene

[xmasbaby0]

You misunderstood.   Your income after full retirement age is not tax free.   Your Social Security benefits will not be reduced by your earnings after you reach full retirement age, but up to 85 % of your Social Security---and any other income can still be taxed.   

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 2021 it was  $18,960.  For 2022 it was  $19,560  —  for 2023 $21,240)  For 2024, $22,320.  For 2025 it will be $23,400

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 2024 Form 1040

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

Single or Head of Household      $25,000

Married Filing Jointly                  $32,000

Married Filing Separately            $0

Some additional information:  There are 9 states that tax Social Security—Colorado, Connecticut,, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont  and West Virginia These states offer varying degrees of income exemptions, but two mirror the federal tax schedule: MN and VT.

[DoninGA]

There is no age limit when it comes to taxable income received.  When you have taxable income it has to be entered on your federal and state tax returns.  If your total income is above the minimum filing requirement you have to file tax return.

Federal and state income taxes, Social Security taxes and Medicare taxes can be withheld from your earned income regardless of your age.

[DianeW777]

Yes, all income, no matter the age is taxable unless specifically stated in tax law. An example would be that not all of your social security income can be taxed because it is maxed at 85% based on calculations that include all other taxable income.

It's quite likely you do owe the tax since you had this other job. The confusion for many, not just yourself, is the social security factor. Once you reach full retirement age, then you can earn as much money as you want without losing or repaying any social security benefits back to them.

The tax law is completely separate and we must file if we have income and meet the filing requirements.

@genek12