A bit unclear about taxes on Social Security

[TBman]

I deleted my earlier response. I'm a retired tax accountant after 34 years on the job. I'm done with tax advice, but one last time as I can't help myself

Two things:

1. See your accountant for guidance on estimated taxes, if necessary (probably), for 2025 based on 2023 income (for now) or projected 2024 income.

2. FYI this is part of the story once you reached full retirement age.

https://faq.ssa.gov/en-us/Topic/article/KA-02471

Again, see your accountant. Last time I looked, a G to C chord transition wasn't part of my job description.....

[rokdog49]

The bottom line is, the decision to receive benefits early is solely dependent on the individual’s financial wants and/or needs both for now and the future.
The information you need is available online and if you need help, as others have said, consult with a tax professional. He/She can explain all the ramifications so that you can make a decision that meets with your plans for the today and the future.
I wouldn’t recommend taking your benefits before you retire unless you are in a cash crunch. It will increase your taxable income and it could be significant depending on your current wages. Then again, if you are concerned that you may not live long, go for it.
You can always work part or full time after you retire. The tax ramifications of that scenario will depend on the amount of your total income as the government defines it.
If you are married and file jointly, that enters into the equation as well.
Good luck!

[seannx]

Recommend taking a big picture approach. Based on your health and any other longevity factors available calculate how many years you may probably get social security benefits. If your income is sufficient to cover expenses then waiting until 70 for the highest benefits is a good move. In my case my income has been higher than expected since taking SS at my full retirement age - 65. For the first few years the extra $$ was helpful, but as my income since has been ample I get taxed on a portion of my SS income. One benefit is that more recent higher income years are replacing lower ones, and my monthly SS benefit now goes up each year. I’m self employed and enjoy my work, so even if I had waited until 70 I’d still be paying taxes on my SS income.
In any event it’s nice to have the SS $$ appear every month in my bank account, and my guitar collection has grown, too. 😊

[LAPlayer]

Of course, you can call the Social Security Administration. They have been extremely helpful when I've called.

[Jim Owen]

I bought a book called Social Security for Dummies. And I second Todd’s point that you must register with Medicare even if your employer still carries your insurance. Medicare has a penalty if you wait.

You’ll still contribute to SS as you work. This might be a good thing as your benefit might be recalculated in a positive way.

You indicate that you will be Full Retirement Age. So you may work as much as you wish without SS skimming off any of your benefits.

But your real question was about taxes. Yes. Depending on your income, a portion of your SS may be taxable. I’m lucky, btw, to live in a state that doesn’t tax my SS. The Feds, however, do tax some of it.

On a side note, some of the federal benchmarks are sadly out of step with inflation. So the floor for what portion of your social security benefits are taxed by the feds seems too low to me—more fitting for the 70s than now.

[Mr. Jelly]

Originally Posted by LAPlayer

Of course, you can call the Social Security Administration. They have been extremely helpful when I've called.

That was easy.

[rmp]

I started as of april collecting my SS distributions.

I plan to work until June.

If you are FRA there are no income penalties.

However, the amount of income will increase since you still plan to work for a while.

so there are tax implications, but you can take care of that by increasing your payroll deduction while you are working.

I would just talk to an accountant or a financial advisor about this. I think the max you can withhold to IRS from your salary earnings is 28% but I could be wrong.

[leew3]

I'll just weigh in to say that the thresholds for individual and joint filing that trigger taxes on SS benefits are ridiculously low. Rant over, back to your regularly scheduled diminished chord progressions.

[815C]

I met with my financial advisor and have a plan.

Thanks guys!

[Jim Owen]

I agree with leew3. Those thresholds were set long ago. They need adjustment for inflation.