Can I ask a stupid question about retirement here?

[wryter2000]

Do I have to pay Social Security tax on Social Security income? Also, will I have to pay Medicare tax on SS income?

[dixiegrrrrl]

1. if you put that exact question into Google

the answer will pop up.
The reason I say that is there ARE tax rates for some Soc. Sec. recipients who are also getting other retirement taxable income.
You have to have a pretty high tax bracket tho.
Medicare taxes are based on "earned income" like a job.

[OKNancy]

2. good link

http://www.ssa.gov/planners/taxes.htm

ETA: I have to pay some taxes because my husband is still working.

[El Supremo]

3. You still have to pay Medicare part B.

If you want it. They take it out of your SS check.

[wryter2000]

4. Many thanks

Very helpful. I've subscribed to this group.

[ret5hd]

5. I don't think you can retire here. Skinner won't allow it.

[wryter2000]

6. Damn

There goes my DU pension. I was counting on that.

[Hoyt]

7. You do not pay Social Security or Medicare tax on your Social Security. You do pay on

any earnings if you continue to work, full or part-time.

As folks above indicate, you might have to pay income tax if your social security, work earnings, taxable pension payments, investment income, etc., exceeds a certain amount.

[wryter2000]

8. Very helpful

thanks.

[SheilaT]

9. What others have already said.

I know too many recent retirees who are totally focused on not having to pay any taxes. Really? Shouldn't we all still be paying for the common good in an appropriate way?

Also, if your taxable income, regardless of source, goes above some specific amount, you pay more for Medicare Part B. And also, even if you've chosen an Advantage Plan which requires no additional payment from you beyond the Medicare Part B (meaning you're not paying for a separate part D), Medicare will bill you extra. I know. Its on their website.

[wryter2000]

10. It's not about avoiding taxes

I'll still be paying taxes on my pension and my income as a writer. I'm just trying to figure out how much money I'll have to live on. Obviously, paying SS taxes will have a big effect on that.

[SheilaT]

11. Very good.

Because recent retirees trying to totally avoid taxes make me a little crazy.

I actually pay extra into Medicare because I have investments that generate enough money to do so, money that doesn't even pass through my hands, so it is somewhat annoying, but I keep on reminding myself that I am vastly more fortunate than many.

[wryter2000]

12. You said a mouthful

I know how fortunate I am. I'm not rich by any means, but anyone who can be comfortable in this world in this century is living like a queen. And I don't mind one little bit paying for other people's kids to get an education.

[whathehell]

13. Well, Sheila, it's all about how much the retiree is getting..

My husband is still working and making a good living, BUT, if I had

to live on my measly social security check and pay taxes, it would have

a VERY bad effect on me.

I know what you're saying about contributing to the common good and I agree,

but shouldn't we be getting the Billionaires to pay more taxes before we hit up

the old people?

[SheilaT]

14. If your only income is your measly social security check,

you won't be paying taxes. And, if I have it straight, the taxes on your social security amount only kick in after your earned income goes above a certain amount. Meanwhile, so long as you've reached your full retirement age, currently 66, your social security benefit does not get reduced, even if it is subject to taxes.

Yes, the billionaires should be paying more, but we're stuck at the moment with the tax code we have.

[whathehell]

15. Well, that's very good..

because it's the situation that MANY social security retirees are in.

[SheilaT]

16. There is some minimum below which there are no federal income taxes

as it is. I don't know what that is, because I've always been fortunate to earn above that minimum. Of course, if you get wages, you are paying FICA, the payroll tax from the very first dollar.

When my mother's only income was her Social Security and a small annuity, she didn't even need to bother to file with the IRS. Nothing was withheld, nothing was owed.

[whathehell]

17. Thanks for that information, Sheila T.

I appreciate it.

[LiberalElite]

25. and that's why they may

be concerned about having to pay taxes. Every little bit helps if you're hard up for $$. When I retire I will not have any investments other than the 401K.

[OKNancy]

18. I posted this earlier but here is info about taxes on SS

this time I will copy and paste:

From - http://www.ssa.gov/planners/taxes.htm

Some people have to pay federal income taxes on their Social Security benefits. This usually happens only if you have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return) in addition to your benefits.

No one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service (IRS) rules. If you:

file a federal tax return as an "individual" and your combined income* is
between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
more than $34,000, up to 85 percent of your benefits may be taxable.

file a joint return, and you and your spouse have a combined income* that is
between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits
more than $44,000, up to 85 percent of your benefits may be taxable.

NOTE:
*Note:

Your adjusted gross income
+ Nontaxable interest
+ ½ of your Social Security benefits
= Your "combined income"

[llmart]

19. I paid federal taxes on a portion of my income.....

and I take great umbrage at the use of the adjective "substantial". Nowadays, if your gross income is $34,000 I would hardly call that "substantial". Net income could be 70% of that.

I also get peeved that I'll be penalized this year if I make over $15,480 gross in wages by having Social Security withhold one or two months of my Social Security because I won't be full retirement age until 2015. Who the heck came up with that rule anyway? I have several friends in the same boat and we're all trying to do calculations as to whether to try not to go over the limit. It's a ridiculous rule - the "we'll take back one dollar for every two dollars you go over the limit". A friend went over the limit last year and even if you only go over the limit by a few dollars, they take a whole month's check and yes, you'll get the balance back but not for another year.

[SheilaT]

20. The rule about your SS being reduced

if you earn over some amount and have not yet reached your full retirement age has been around more or less forever.

I am also certain that the reduction in benefits from earning above a certain amount, continued to age 70. Perhaps I'm wrong about that, perhaps it's always been "full retirement age". In any case, that's been around forever.

[llmart]

21. Just because it's been around forever....

doesn't mean it makes any sense. AARP should put some pressure on to change that law, especially since they raised the age of full retirement for baby boomers. They take the Part B Medicare premium of almost $105 out of my check each month since I turned 65 and now they're going to take a monthly check or two because I may make over the whopping annual income of $15,480?

[SheilaT]

22. Once you turn 66 they won't take

away any of your SS. If you earn "too much" money, starting at $25,000 for a single person, you will pay taxes on part of your SS income. And since I doubt there is ever any withholding from Social Security, you will need to be prepared to write a check for what's owed.

And if you're lucky enough to earn above some amount, you pay even more for Part B and Part D. It's still a hell of a lot cheaper than most plans out there.

[llmart]

23. Yes, I already know that they won't take any next year....

but it's still a stupid rule to take $1 for every $2 you make over $15,480. And if you make even $10 over they'll take your whole check and you have to wait a year to get the balance back.

Yep, I paid taxes on some of my Social Security last year. Another kick in the head.

I know this is an unpopular thing to say on DU, but sometimes I can actually understand why there are people like the tea partiers. I believe in paying my taxes and paying a fair share, but what's fair about taxing the Social Security of someone who lives on very little? I still say that AARP should focus some effort on getting the cap on Social Security lifted so those who make a good living should pay into Social Security on all of their wages.

[SheilaT]

24. All I can say is that at least you already know about this,

so as unpleasant as it is, it's not a surprise.

And since you really do care a great deal (with good reason), you should start a campaign to change this. Heck, run for office yourself.

I absolutely do agree that the cap on how much is taxed for SS should at the very least be raised substantially. It's capped right now at $113,700, according to a quick internet search. It needs to go up to at least $500,000, and maybe as you've said, no cap at all.