Social Security Taxation & Benefits

Read below for a quick reference guide on Social Security Taxation and the effect on your benefits if you keep working.....

To calculate IF social security income is taxable:

• First add ½ of your social security benefits to all other income
  
• Then compare the above total to the base amount for your filing status (see below)
• If the above total is more than your base amount, some of your benefits may be taxable

2014 Base Amounts:

• $32,000 for married couples filing jointly
  
• $25,000 for single, head of household, or married individuals filing separately who did NOT live together
• $0 for married persons filing separately who DID live together during the year

To see HOW MUCH social security income is taxable:
Generally up to 50% of your benefits will be taxable. However, up to 85% of your benefits can be taxable if either of the following applies to you:

• The total of ½ your social security benefits and all your other income exceeds $34,000 ($44,000 if your status is married filing jointly)
  
• You are married filing separately and lived with your spouse at any time during the year

Determining the EFFECT OF EARNED INCOME on benefits:
In years PRIOR to full retirement age:

• $1 in benefits will be lost for every $2 of earning in excess of $15,480 (wages only; investment earnings don’t apply)
• You may lose some benefits, but at least you are able to accumulate more credits for when you hit retirement age

In the YEAR OF full retirement age:

• $1 in benefits will be lost for every $3 of earning in excess of $41,400 (applies only to the months of your earnings prior to full retirement age)
  

In the TIME AFTER full retirement age:

• There is no limit on earnings beginning the month that an individual attains full retirement age

We always recommend that you speak with a qualified financial advisor before making any decisions related to your social security.