Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (8) | Ignore Thread Prev | Next
Author: BruceCM Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121150  
Subject: Re: Will Your SS be taxed? Date: 11/3/2013 2:07 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 9
"Combined Income"?? First I've heard the use of that term.

The more traditional term used is ones "provisional income", which is 1/2 of household SS benefits + any muni bond interest + modified AGI.

The 'gotchya' in this calc is that the first and second provisional income thresholds (25,000 & 34,000 for single filers and 32,000 & 44,000 for those married filing jointly) are NOT indexed for inflation, which means every year, the percentage of SS beneficiaries having to include some% - up to 85% - as ordinary income, is increasing. For example, for a fairly average couple collecting $26,000 in SS benefits, only has to have at least another $19,000 in household MAGI (which for the vast majority is simply their gross income plus any muni bond interest) to have to start including part of the SS benefits as ordinary income. And this will include all gross income, such as retirement plan/TIRA withdrawals, capital gains, qualifying dividends, interest of all forms and pension payments. The only form of income I can think of that is not included would be qualifying Roth IRA withdrawals and distributions that are return of capital, as one might get from MLPs, some REITs and as part of the payments received from a single premium immediate annuity.

An although I appreciate the tax calculations, be careful not to let the tax tail wag the family financial dog. When to begin SS benefits requires taking into account all household variables....one of which is the tax expense.

BruceM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (8) | Ignore Thread Prev | Next

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
Post of the Day:
Value Hounds

Kate Spade's Wild Ride
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement