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Author: rosewine 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 19257  
Subject: Social Security Question Date: 12/23/2005 10:08 AM
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I am between ages 62 and SSNRA and collecting SS benefits and working part time. I know for 2005 I could earn up to $12,000 without having benefits affected. I will actually earn more than that this year. According to SS, my benefit will be reduced by $1 for every $2 I earn above $12,000. Does anyone know how they actually do this?

Will the monthly payment be reduced (i.e. spead it over the year) or will they take it out of the first payment, or what? How long does it take for them to know that I've made too much and make the reduction?

Thanks.
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Author: tedhimself Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10277 of 19257
Subject: Re: Social Security Question Date: 12/23/2005 11:23 AM
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Will the monthly payment be reduced (i.e. spead it over the year) or will they take it out of the first payment, or what? How long does it take for them to know that I've made too much and make the reduction?

When I do my income taxes I have to show how much I have received in social security benefits and how much other income I had during the year. There is then a formula that shows how much of my Social Security will be taxed. Turbo Tax does this for me automatically so I don't know the formula offhand.

They do take my medicare payments out of the monthly deposit of my benefits. (that starts at age 65.)
Ted


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Author: tedhimself Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10278 of 19257
Subject: Re: Social Security Question Date: 12/23/2005 11:26 AM
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One more thing. You will almost certainly have to make estimated quarterly tax payments, even if your employment is taking out SS taxes because your employer will not know how much SS you are getting. Or you can fill out a form to let your employer know to take out more of your pay to allow for the taxes on SS.

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Author: wcfenton Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10279 of 19257
Subject: Re: Social Security Question Date: 12/23/2005 12:35 PM
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I am between ages 62 and SSNRA and collecting SS benefits and working part time. I know for 2005 I could earn up to $12,000 without having benefits affected. I will actually earn more than that this year. According to SS, my benefit will be reduced by $1 for every $2 I earn above $12,000. Does anyone know how they actually do this?

Will the monthly payment be reduced (i.e. spead it over the year) or will they take it out of the first payment, or what? How long does it take for them to know that I've made too much and make the reduction?

-------------------

I'm not sure about the mechanics involved, but the online SSA Publication "How Work Affects Your Benefits" may answer some of your questions:

http://www.socialsecurity.gov/pubs/10069.html

It's usually better to give them a call so that you get specific answers to your questions. Some more info:

http://www.socialsecurity.gov/pubs/10024.html

Good luck,
Bill

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Author: rosewine Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10281 of 19257
Subject: Re: Social Security Question Date: 12/23/2005 2:05 PM
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Thanks. I'm not concerned about how SS is taxed as I know how that works. My seasonal job is working for a tax prep service so that part is easy. My concern is how do they get the $1 for every $2 earned reduction in benefits since I'll make over $12,000.

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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: 10282 of 19257
Subject: Re: Social Security Question Date: 12/23/2005 4:55 PM
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Rosewine asks:

My concern is how do they get the $1 for every $2 earned reduction in benefits since I'll make over $12,000.

The SSA will learn of the income you earn over $12,000 in one of three ways:

a. You tell them you expect to earn "X" dollars above the $12K. If you do, they will reduce your monthly SSA check by the prorated amount of the excess for the rest of the year. If it's too much, you'll get a check for the extra amount later. If it's too little, they will pick up the difference next year.

b. If you don't tell them, they'll get the info from your W-2 for the year, or;

c. From your income tax return for the year when you pay the self-employment tax if you get a 1099 instead of a W-2.

In the latter two instances, the reduction will occur in the subsequent year when you may not be working and need the full SS check to live on. That's why IMHO it's always best to let the SSA know immediately whenever you expect to exceed the earnings limit for the year.

Hope that helps.

Regards ... Pixy

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Author: rosewine Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10283 of 19257
Subject: Re: Social Security Question Date: 12/23/2005 5:54 PM
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Thank you. That's what I was looking for.

Unfortunately, for 2005 (my first full year on SS) I didn't have a clue how much I would make for the year, so never let them know. For 2006 I'll have a better idea and be proactive about it.

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Author: ep0001 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10284 of 19257
Subject: Re: Social Security Question Date: 12/23/2005 9:30 PM
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They take it out in the 1st payment. If you lose a whole month or more, at FRA, the benefit is recalculated to remove the penalty for any months lost.

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