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Author: broomstick One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75785  
Subject: Social Security, income, and taxes Date: 7/8/1998 9:47 PM
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My understanding of the Social Security rules are that once you retire and start to recieve Social Security, there is a limit on how much money you can make before they start taking it away from you (or taxing the dickens out of it, which amounts to the same thing).

Do they treat investment income the same as if the SS recipient has income from work? How about dividend income? IRA distributions? Capital gains?

I've always been curious about this. Are there any websites I should look at? I paged back a ways through the Taxes folder, but didn't see anything relevant.

Thanks Cheryl
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Author: tedferg Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4288 of 75785
Subject: Re: Social Security, income, and taxes Date: 7/8/1998 10:11 PM
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Pretty sure any investment income is excluded from this calcualtion, refers just to earned income.

Joint income:
< 32K no SS taxes

32K - 44K then 50% of SS is taxable

>44K the 85% of SS is taxable

Earnings also affect SS as follows
< 65 Base is $9,120 the lose $1 SS for every $2 earned.
> 65 Base $14,500 then lose $1 for every $3 earned.
>70 the no loss of SS

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Author: vargaj Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4291 of 75785
Subject: Re: Social Security, income, and taxes Date: 7/9/1998 12:18 AM
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As tedferg said at the end of his post, if you have earnings while on SS, you will lose benefits. After you receive those benefits you will be taxed at 85% for income above $25K (single) $32k (married) based on all of your income, that includes IRA, 401k, etc income. It even includes interest from tax free municipal bonds, which ordinarily are not taxed. It has not yet been resolved, but the best tax minds believe that this will include Roth IRA distributions, which, as we all know are not taxed!!!!!

Joe Varga

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4297 of 75785
Subject: Re: Social Security, income, and taxes Date: 7/9/1998 7:57 AM
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Greetings, Cheryl, and welcome.

<<My understanding of the Social Security rules are that once you retire and start to recieve Social Security, there is a limit on how much money you can make before they start taking it away from you (or taxing the dickens out of it, which amounts to the same thing).

Do they treat investment income the same as if the SS recipient has income from work? How about dividend income? IRA distributions? Capital gains?

I've always been curious about this. Are there any websites I should look at? I paged back a ways through the Taxes folder, but didn't see anything relevant.>>

Yes, there are earnings limitations on work between the ages of 62 and 70 that if exceeded will result in a forfeiture of the Social Security you receive. There are also overall income limits that may result in the taxation of SS. Others have given you some data on that, but you may want to go to http://www.ssa.gov where you can get a more complete explanation.

Dividends, capital gains, interest, IRA distributions, pensions and the like have no impact on the earnings limits that result in SS forfeiture. You lose part of your SS only if work (i.e., a job) causes you to exceed those limits. However, these same items are counted as part of your income in determining whether or not your SS payments will be subject to tax because that taxation is based on your Adjusted Gross Income.

Regards…..Pixy






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Author: KATinChicagoland Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4349 of 75785
Subject: Re: Social Security, income, and taxes Date: 7/10/1998 12:20 PM
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It has not yet been resolved, but the best tax minds believe that this will include Roth IRA distributions, which, as we all know are not taxed!!!!!

That wouldn't include this tax mind. It's perfectly clear under present law that distributions from Roth IRAs would not affect the amount of tax on your social security. I've asked the IRS to include this in the questions and answers they're planning to publish on the subject of Roth IRAs, but even without such guidance the law is very clear. It's conceivable, but I think highly unlikely, that Congress will eventually change the law to bring Roth IRA distributions into the calculation.

Kaye Thomas, author
Fairmark Press Tax Guide for Investors
http://www.fairmark.com

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Author: LasVegasFool One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4376 of 75785
Subject: Re: Social Security, income, and taxes Date: 7/11/1998 7:46 PM
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>Do they treat investment income the same as if the SS >recipient has income from work? How about
> dividend income? IRA distributions? Capital gains?

From doing my mother's taxes, it appears that all income counts.

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4381 of 75785
Subject: Re: Social Security, income, and taxes Date: 7/12/1998 9:49 AM
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LasVegasFool,

QUOTE

>Do they treat investment income the same as if the SS >recipient has income from work? How about
> dividend income? IRA distributions? Capital gains?

From doing my mother's taxes, it appears that all income counts.

UNQUOTE

Careful. Your answer is far too much off the cuff. In the context of the original question, only earned (i.e, job) income counts for the forfeiture of Social Security benefits, and then only between the ages of 62 and 70. All income counts only when looking at the potential of taxation on 50% to 85% of benefits. To be taxed, the modified adjusted gross income must exceed certain floors.

Regards.....Pixy

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Author: LasVegasFool One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4415 of 75785
Subject: Re: Social Security, income, and taxes Date: 7/13/1998 9:49 PM
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>Careful. Your answer is far too much off the cuff. In >the context of the original question, only earned
> (i.e, job) income counts for the forfeiture of Social >Security benefits, and then only between the
> ages of 62 and 70. All income counts only when >looking at the potential of taxation on 50% to 85%
> of benefits. To be taxed, the modified adjusted gross >income must exceed certain floors.

Wasn't the original question regarding the taxation of the benefits?

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