How Federal Taxes Affect Social Security Benefits

by Clauson on September 8, 2017

After you’ve been approved for Social Security benefits, you may wonder about the specifics of the amount that you’ll receive. In addition to the amount that you paid in over the course of working, you need to consider the effect that federal taxes has on Social Security benefits. Federal taxes on income can come into play if you are working or have other income. This depends on how much you make apart from the benefits you receive.

Federal Taxes Affect Social Security Benefits

Keep this information in mind about federal taxes on Social Security benefits:

a) If you are earning income that is considered substantial, this will affect the federal income taxes on your benefits.
Additional income can affect whether you will be subject to taxes. This depends on whether or not your income is considered substantial. There are different amounts depending on if you have a spouse and how you file your taxes.

b) You will not need to worry about your entire benefits being taxed.
No matter how much extra money you make, the entire amount will not be taxed.

c) If you make a combined income between $25,000 and $34,000 and file as an individual, the following applies:
Up to 50 percent of your combined income can be taxed. If you make more than this, up to 85 percent can be taxed.

d) If you have a total combined income between you and your spouse of between $32,000 and $44,000 and file jointly, the following applies:
You will have to pay federal income tax on up to 50 percent of your Social Security benefits. If you have a combined income over this, the percentage can go up to 85.

You will probably have to pay taxes on your Social Security benefits if you and your spouse decide to file separate tax returns instead of filing jointly.

e) Combined income has a specific meaning.
The phrase “combined income” from above combines a few different pieces. It adds half of your Social Security benefits with your nontaxable interest as well as your adjusted gross income.

f) Use your Social Security Benefit Statement {Form SSA-1099} to help you.
The SSA-1099 will help you complete your federal income tax return and find out if these benefits are taxable.

The guidelines above will help you determine your federal taxes on your Social Security benefits. If you have any questions in regards to the information above or applying for benefits, please contact us.

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Ways to Boost Your Social Security Benefits

by Clauson on September 4, 2017

The payments that you receive from the Social Security Administration are an important addition to your retirement income. Many people rely on these payments to provide partially for them no longer working. Because of this, it’s important to fully understand the factors that go into the payments that you receive. You need to plan for your future in the best way possible and that includes your retirement.

Boost Your Social Security Benefits

Strategies to boost your Social Security benefits:

1) Work for the most years that you are able to.
One way to make sure that you receive higher payments once you retire is by working for at least 35 years. The 35 years that you received the most income will be averaged together to determine your payments. If you worked less than 35 years, the zeros will be added in as well. This will lower the amount that you can receive.

2) Increase your income whenever possible.
The more you earn, the more you will be able to get from Social Security when you retire. You can do this through job progression or additional income from a second job.

3) Keep working until your full retirement age.
For most people, your full retirement age will be either 66 or 67. If you claim early, your payments will be reduced. If you wait until full retirement age, you can receive your full payments during your retirement.

4) Delay claiming Social Security until you’re 70, if possible.
If you’re able to wait to claim until you turn 70, you will be able to increase your payments. For each year between your full retirement age and age 70, your payments will increase by 8 percent for each year.

5) Claim spousal payments.
You are able to receive 50 percent of the higher earner’s benefit if you were married for at least 10 years. This can either be a current or ex-spouse.

6) Claim twice.
After you hit your full retirement age, couples that both earned money could claim spousal benefits and then later switch to payments based on your own work record.

7) Don’t forget about your kids.
If you have dependent children under 19, you may be able to get additional Social Security payments for them that are worth up to 50 percent of your full retirement benefit.

When it comes to planning for your retirement, make sure to keep these strategies in mind to boost your Social Security benefits. The more you plan now, the better retirement you can have.

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ssi and ssdi concurrent benefits

by Clauson on August 23, 2017

Two different disability programs—SSI and SSDI—are managed by the Social Security Administration (SSA). Is there a difference between the two programs, and can you qualify for both SSI and SSDI monthly benefits?

Qualify for Both SSI and SSDI Monthly Benefits?

SSDI is a program for disabled people who have contributed over time to social security before becoming disabled. You will likely qualify if you’re 18 or over and have a long-term disability that keeps you from working.

SSI is a program to supplement low-income or no-income individuals and families, and SSI is a needs-based program with very low income requirements to qualify.

Sometimes, you can simultaneously collect both SSI and SSDI benefits, referred to as concurrent benefits, particularly if you have been approved for SSDI but for a low payment. To qualify for the additional SSI payment, your income must be less than $735 per month and you must have limited assets. Basically, if your SSDI is less than $735, you may qualify for SSI. Your SSDI will be a low payment if you didn’t contribute very much to social security while you were working, so the benefit of having the additional SSI payment is that it will increase your benefit up to $735 per month total.

If you receive SSI, it will be lower to account for the SSDI you are already receiving. You might be wondering: how does the SSA determine if you qualify for both SSI and SSDI monthly benefits? You can apply for both. Your assets and income will be reviewed by the SSA, and then they will designate your claim as concurrent if you qualify.

As an SSDI recipient, you are able to get on Medicare two years after your SSDI eligibility date. Under SSI, you only qualify for Medicaid, which offers more services than Medicare. However, more doctors accept Medicare patients so you might have an easier time finding a doctor.

For both programs, most states—including North Carolina—add a state supplement to the federal amount.

You’ll have to provide several forms of identification, including proof of US citizenship, Social Security number (SSN), and date and place of birth. Additionally, SSDI requires detailed medical information about your diagnosis.

For both programs, you’ll need to disclose to SSA any other benefits you’re receiving, like worker’s compensation or military veteran benefits.

If you think you might qualify for concurrent benefit programs, or just SSI or SSDI alone, and you’re having difficulty making the determination about exactly what you qualify for, give us a call today and we will help you with your claim.

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Social Security Income in 2018

by Clauson on August 17, 2017

If you’re receiving social security benefits, or expect to apply for them next year, you could receive a cost of living adjustment (COLA) for your Social Security income in 2018.

Social Security Income in 2018

Inflation rates prompt the government to give cost of living adjustments. Over the last few years, these adjustments have been 1.7 percent or less, which is something at least, but doesn’t really make a big difference. Some experts, like The Senior Citizens League (TSCL) expect a 1.9 to 2.1 percent increase from SSA, if inflation rates hold steady.

Seniors living on a fixed income would welcome any increase. If the government grants the COLA next year, benefits will be at a six-year high, the highest since 2012. If the Social Security Administration decides to increase Social Security income in 2018, the agency would make the announcement in the fall of 2017.

TSCL says that any increase is welcome, but says that only new legislation will increase SSA benefits to a level that benefits seniors. That’s because the way SSA calculates the COLA puts seniors at a disadvantage. The COLA doesn’t factor in the rising costs that retirees are paying and the portion of their income being spent on buying things. In effect, seniors are still losing their buying power. TSCL says the COLA is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). When the price index rises, the COLA rises, but it is based on younger workers and doesn’t factor in the spending pattern of seniors (age 62 and up). It also doesn’t facto in other rapidly growing costs that seniors incur, such as increases in Medicare Part B premiums, which have risen a whopping 195 percent in the last 15 years.

TSCL says that seniors need a more relevant COLA and a boost to benefits if they have any hopes of catching up where benefits equal expenditures. TSCL says the boost to benefits doesn’t have to be large; it can be modest but needs to be there to help people who are living longer and therefore are retired for a much longer period of time. Groups like TSCL are strong supporters for Congressional legislation that would do both.

If all of this has your head swimming, consider giving us a call. We can help you through the SSA benefits process to ensure that you get the Social Security income in 2018 that you deserve.

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