Your browser is currently set to block JavaScript.

For full functionality of this site it is necessary to enable JavaScript. Here are the instructions how to enable JavaScript in your web browser.

After enabling javascript, please refresh the page to go back to experts.com site with full functionality

Would you turn off/on JavaScript?

It's a widely used language that makes the web what it is today, allowing for websites to be more responsive, dynamic, and interactive. Disabling JavaScript takes websites back to a time when they were simple documents without any other features.

What are the advantages of using JavaScript?

Speed. Since JavaScript is an 'interpreted' language, it reduces the time required by other programming languages like Java for compilation. JavaScript is also a client-side script, speeding up the execution of the program as it saves the time required to connect to the server.

banner ad
Experts Logo

articles

Are My Social Security Benefits Taxable? Don't be Surprised at Tax Time

By: Joseph Matheson
Tel: (973) 428-8885
Email Mr. Matheson


View Profile on Experts.com.


When it comes to retirement many Americans believe they can count on their full Social Security benefits as a core element of income. You can imagine the surprise at tax-time when some of these same benefits are returned to the Federal Government in the form of benefit reduction and taxation. Here is what you need to know.

  1. Social Security and Retirement Benefits can be "REDUCED" as well as taxed. The benefit reduction calculation is separate from the taxability of your benefits. If you start drawing retirement benefits prior to reaching your full retirement age (65 if born prior to 1938, and it gradually increases up to age 67 if born in 1960 or later) in 2013 your benefits could be reduced $1 for every $2 of earnings over $15,120. This calculation is less punitive if it occurs during the year of retirement, but you should forecast this potential benefit reduction prior to deciding to start taking your benefits.
  2. If you do not work, your Social Security benefit will probably not be impacted.
  3. Your Social Security Benefits can be taxed no matter how old you are. There is not an age threshold that protects your Social Security Benefits from federal taxation. If you have sufficient income, your benefits could be taxed.
  4. If you have other income your Social Security benefits may be taxed. The taxability of Social Security benefits depends on two things; your qualified total income and your marital status. If your total income surpasses certain thresholds (called base amount), some of your benefits could be taxed.
  5. Can you estimate whether your benefits will be taxed? Yes. Per the IRS, here is a quick calculation to determine if your benefits may be taxable:
    • 1st: Calculate 1/2 of your annual Social Security benefit

      2nd: Add the 1/2 benefit total to all your other estimated income. (Use income from all sources including tax exempt interest.)

      3rd: Compare your calculated total to the base amount for the year. If it exceeds the base amount, some of your Social Security benefit may be taxed.

      2013 Social Security Base Amounts:

      $25,000: Single, Head of Household, Widow or Married Filing Separately:

      $32,000: Married filing Joint

  6. Are all your Social Security benefits taxable? No, a maximum of 85% of your Social Security benefits is subject to federal tax.

Note: To qualify as married filing separately, you must also be living apart for the entire year. The base amount if you lived together is $0. There is also a significant marriage penalty in the taxability of your Social Security benefits as the joint amount is only $32,000 instead of $50,000 (or 2 times the single "base" amount).


Joseph B. Matheson is a Certified Public Accountant with more than twenty-five years of public and private accounting experience. Mr. Matheson passed the CPA exam with one of the highest scores in the nation, garnering honors at both the state and national level. His knowledge and experience guarantees focus on the needs of businesses and high net worth individuals and providing litigation and forensic support to attorneys and litigants.

©Copyright - All Rights Reserved

DO NOT REPRODUCE WITHOUT WRITTEN PERMISSION BY AUTHOR.

Related articles

expert_placeholder

6/29/2012· Taxation

Tax & Estate Planning: The Benefits of a Family Limited Partnership

By: ECS Financial

Years ago, a family limited partnership (FLP) was little more than a clever loophole used almost exclusively by wealthy persons. But the FLP's mystique has diminished in recent years, making it a popular and effective estate-planning tool for many.

expert_placeholder

4/3/2008· Taxation

Excise Taxes For Unreasonable Compensation At Charities

By: Stephen D. Kirkland, CPA, CMC

The Internal Revenue Service (IRS) now keeps a close eye on charities and social welfare organizations to ensure that their tax-exempt status is not abused. One of the primary factors the IRS now examines is the amounts of compensation and benefits provided by charities to their key employees

Joseph-Matheson-Forensic-Accounting-Expert-Photo.jpg

2/6/2014· Taxation

Tips for Taxpayers about Identity Theft and Tax Returns

By: Joseph Matheson

Identity theft remains a top priority for the Internal Revenue Service in 2014. Identity theft is one of the fastest growing crimes nationwide, and refund fraud caused by identity theft is one of the biggest challenges facing the IRS. This year, the IRS continues to take new steps and strong actions to protect taxpayers and help victims of identity theft and refund fraud.

;
Experts.com-No broker Movie Ad

Follow us

linkedin logo youtube logo rss feed logo
;