topic Social Security taxes in Retirement tax questions

Social Security taxes

justdeauit — Thu, 25 Mar 2021 04:57:54 GMT

Military retirement pay is not considered earned income, so it won’t affect the taxability of your Social Security checks each year. Why does Turbo Tax go through the complicated process of calculating taxable amount of social security benefits

Re: Social Security taxes

xmasbaby0 — Thu, 25 Mar 2021 12:39:08 GMT

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 will be $17,040—for 2019 it will be $17,640— for 2020 it will be $18,240) 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.

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

Re: Social Security taxes

dmertz — Thu, 25 Mar 2021 13:21:08 GMT

@justdeauit wrote:
Military retirement pay is not considered earned income, so it won’t affect the taxability of your Social Security checks each year.

That's incorrect. Summarizing what xmasbaby0 said, you are confusing the calculation of the taxable amount of Social Security benefits (which doesn't depend on whether the income is earned or not) with the calculation of the amount of Social Security benefits that you are eligible to receive (which is affected by the amount of earned income if you are under full retirement age).