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pilgrim130
Level 1

Impact to taxes for retired couple on social security

My husband and I are retired and living on social security and a pension.

 

We enjoy buying antiques and the ones that we don't keep in our personal collection, we sell on eBay. So we will be getting a 1099 k this year.

 

Will we need to pay self-employment taxes? If our standard deduction and the taxes I pay on my pension exceed the amount that would be due for self-employment tax, would we incur some kind of a penalty for not reporting the sales we have on eBay quarterly?

 

Is self-employment tax to help fund social security and Medicare? If it is, since we already collecting social security and my husband is on Medicare, would we still have to pay this tax or is it for entirely different purposes?

 

Also, if we do have to pay the self-employment tax, are the fees that are charged by eBay to use the site for selling deductible as a business expense?

 

Thank you for any clarity you can provide on these topics.

 

 

 

 

1 Reply
xmasbaby0
Level 15

Impact to taxes for retired couple on social security

Even when you are receiving Social Security, you will still have to pay in to SS and Medicare if you earn money ---whether you get a W-2 from an employer or if you have self-employment income.

 

SELF EMPLOYMENT INCOME/“side jobs”

 

https://ttlc.intuit.com/questions/2926899-how-does-my-side-job-affect-my-taxes

 

https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/...

 

https://ttlc.intuit.com/community/self-employed/help/what-is-the-self-employment-tax/00/25922

 

https://ttlc.intuit.com/questions/2902389-why-am-i-paying-self-employment-tax

https://ttlc.intuit.com/questions/1901340-where-do-i-enter-schedule-c

 

 

https://ttlc.intuit.com/questions/3398950-what-self-employed-expenses-can-i-deduct

 

 

https://ttlc.intuit.com/questions/1901110-do-i-need-to-make-estimated-tax-payments-to-the-irs

 

 

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,  (For 2022 it will be $19,560) 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 2021 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

 

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
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