When are social security benefits taxed?

Are you considering post-retirement employment? If you're collecting social security and thinking of returning to the work force, you may have questions about the effect of that income on the taxability of your benefits.

The answer: Under current law, part of your social security benefits may be taxable. How much? The basic rule is that up to 85% of your annual benefits can be subject to federal income tax when your "provisional" income exceeds specified thresholds. Generally speaking, provisional income is the sum of your adjusted gross income plus tax-exempt interest and one-half of your social security benefits.

Benefits are not taxed when your provisional income is below the threshold applicable to your filing status.

The federal thresholds, called base amounts, range from zero, if you're married filing separately and live with your spouse all year, to $32,000, if you're married filing jointly.

A $25,000 base applies when you file as single, head of household, or as a qualifying widow or widower with a dependent child. If you're married, but file separately and do not live with your spouse during the year, you'll also use the $25,000 figure.

Illustration: When you're married, file a joint return, and your provisional income exceeds $32,000, a portion of your benefits will be taxed.

Please call us to discuss how income from a new business venture or job will impact your taxes. We'll be happy to help with planning moves, such as the timing of retirement account distributions, that can ease the tax bite.

My Point of View on How Outsourcing is Affecting Social Security

My Point of View on How Outsourcing is Affecting Social Security.

Our Entitlement pyramid is crumbling and outsourcing is one of the culprits.

We are creating an inverse pyramid by having less employees contributing to
support the present time retirees.

The outsourcing business has a detrimental impact on U.S.
Employment, the U.S. Economy and the U.S. Treasury, because the
money is expended abroad and normally it does not come back.

The outsourcing business is growing day by day in America.

Employment (payroll) is the basis used in theory to calculate future
benefits.

When you outsource a job:

U.S. may have a unemployed american.
U.S. will not received Social Security taxes from this unemployed American.
U.S. will not receive Medicare Taxes from this unemployed american.
U.S. will not benefit from consumer spending from this unemployed american.
U.S. will have to cover the uninsured through medicaid because this
unemployed american.
U.S. will lose all the direct and indirect benefit of having that unemployed
american working.
U.S. is exporting its working capital.


U.S. must maintain quality in education so our jobs are not exported to help
other countries. We need the help ourselves.

Our social security program is in trouble Our Medicare program is in trouble
Our health insurance industry does no contain cost.
Our future retirees are in trouble.

Jose F Padro
2009

Any tax advice included in this written or electronic communication was not
intended or written to be used and it cannot be used by the taxpayer, for
the purpose of avoiding any penalties that may be imposed on the taxpayer by
any governmental taxing authority or agency.