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If youre about to retire, you may be wondering whether you should start claiming your hard-earned Social Security benefits now. Here are a few key factors to consider in making that decision.
Is My Social Security Income Taxable The Quick Answer
According to the IRS, the quick way to see if you will pay taxes on your Social Security income is to take one half of your Social Security benefits and add that amount to all your other income, including tax-exempt interest. This number is known as your combined income .
If your combined income is above a certain limit , you will need to pay at least some tax.
The limit is $25,000 if you are a single filer, head of household or qualifying widow or widower with a dependent child. The limit for joint filers is $32,000. If you are married filing separately, you will likely have to pay taxes on your Social Security income.
Nothing Worth Doing Is Ever Easy And So It Goes With Social Security When The Time Comes To File For Your Benefits Be Prepared Here Are The Nuts And Bolts Of The Application Process
Christine Balderas 2017
While there is an awful lot of debate on when you should file for Social Security benefits and exactly which claiming strategy you should use, the actual process you follow to file is more straightforward, but not without its own confusing issues.
Lets take a look at those issues and what is required to start getting your payments once youve decided its time to collect.
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Tips For A Successful Retirement
- Saving for retirement requires a strong financial plan and smart investing. A financial advisor help you on both fronts. SmartAssets free tool matches you with financial advisors in your area in 5 minutes. If youre ready to be matched with local advisors who can help you achieve your financial goals, get started now.
- Dont forget to include Social Security payments in your retirement plans. They may not have a titanic impact on your finances in retirement, but they can line your pockets with some extra cash when you might need it. SmartAssets Social Security calculator can help you get an idea of your future benefits.
- If you are thinking about where to retire, SmartAssets retirement tax-friendliness tool can help you figure out how your Social Security benefits, property taxes, and retirement account and pension withdrawals will be taxed in each state.
Why Do You Need One
A Social Security number is important because you need it to get a job, collect Social Security benefits and get some other government services. You should keep your Social Security card in a safe place with your other important papers and avoid giving it out unnecessarily. Keep in mind that in many cases, even if you lost your card, you may not need a replacement. In most cases, simply knowing your Social Security number is enough. But if you do need a replacement, we make it easy.
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If You Work While Getting Social Security
Yes, you can work full or part-time while also getting Social Security retirement benefits. However, if you have not yet reached your full retirement age, and if your net income from working is higher than the annual earnings limit, your annual benefits will be reduced. Beginning in the month you reach full retirement age, Social Security will stop reducing your benefits no matter how much you earn.
During any full calendar year in which you are under full retirement age, Social Security deducts $1 from your benefit payments for every $2 you earn above the annual net income limit. The income limit changes every year. In 2017, the income limit was $16,920.
Social Security Credits For Self
The Social Security Administration adheres to a credit system to determine benefit eligibility. The credit requirements differ depending on the type of benefit being sought. However, the same credit system applies to self-employed and traditionally employed workers.
There is a set yearly amount of earnings needed for Social Security credits, and the amount increases annually with average earnings levels. In 2021, each $1,470 of earnings will get you one credit, up to the maximum of four credits per year. In 2022, the amount of earnings needed for one work credit will increase to $1,510.
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Can I Work Full Time At 66 And Collect Social Security
When you reach your full retirement age, you can work and earn as much as you want and still get your full Social Security benefit payment. … In addition, as long as you continue to work and receive benefits, we’ll check your record every year to see whether the extra earnings will increase your monthly benefit.
Is Your Condition Found In The List Of Disabling Conditions
For each of the major body systems, we maintain a list of medical conditions that we consider severe enough that it prevents a person from doing substantial gainful activity. If your condition is not on the list, we have to decide if it is as severe as a medical condition that is on the list. If it is, we will find that you are disabled. If it is not, we then go to Step 4.
We have two initiatives designed to expedite our processing of new disability claims:
- Compassionate Allowances: Certain cases that usually qualify for disability can be allowed as soon as the diagnosis is confirmed. Examples include acute leukemia, Lou Gehrigs disease , and pancreatic cancer.
- Quick Disability Determinations: We use sophisticated computer screening to identify cases with a high probability of allowance.
For more information about our disability claims process, visit our Benefits For People With Disabilities website.
The Basics About Survivors Benefits
. If you are working and paying into Social Security, some of those taxes you pay are for survivors benefits. Your spouse, children, and parents could be eligible for benefits based on your earnings.
. You and your family could be eligible for benefits based on the earnings of a worker who died. The deceased person must have worked long enough to qualify for benefits.
For more information, please read .
State Taxes On Social Security Benefits
Everything weve discussed above is about your federal income taxes. Depending on where you live, you may also have to pay state income taxes.
There are 13 states that collect taxes on at least some Social Security income. Four of those states follow the same taxation rules as the federal government. So if you live in one of those four states then you will pay the states regular income tax rates on all of your taxable benefits .
The other nine states also follow the federal rules but offer deductions or exemptions based on your age or income. So in those nine states, you likely wont pay tax on the full taxable amount.
The other 37 states do not tax Social Security income.
|State Taxes on Social Security Benefits|
|Taxed According to Federal Rules||Minnesota, North Dakota, Vermont, West Virginia|
|Partially Taxed||Colorado, Connecticut, Kansas, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah|
|No State Tax on Social Security Benefits||Alabama, Alaska, Arizona, Arkansas, California, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Nevada, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, Wisconsin, Wyoming|
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Information About Family Members
- Social Security numbers and proof of age for each family member who may qualify for benefits and
- Proof of marriage, if your spouse is applying for benefits, as well as dates of prior marriages, if applicable.
If you don’t have all the documents you need, don’t delay filing for benefits. We will help you get the information you need.
How To File Social Security Income On Your Federal Taxes
Once you calculate the amount of your taxable Social Security income, you will need to enter that amount on your income tax form. Luckily, this part is easy. First, find the total amount of your benefits. This will be in box 3 of your Form SSA-1099. Then, on Form 1040, you will write the total amount of your Social Security benefits on line 5a and the taxable amount on line 5b.
Note that if you are filing or amending a tax return for the 2017 tax year or earlier, you will need to file with either Form 1040-A or 1040. The 2017 1040-EZ did not allow you to report Social Security income.
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Will Social Security Get A $200 Raise In 2021
In order for a 5.9% increase to result in an extra $200 per month in benefits, you would have needed to have received at least $3,389 per month in 2021. … This figure changes from year to year to adjust for inflation and is the the amount on which the SSA calculates the maximum Social Security benefit.
If Health Problems Force You To Retire Early
Sometimes health problems force people to retire early. If you cannot work because of health problems, you should consider applying for Social Security disability benefits. The amount of the disability benefit is the same as a full, unreduced retirement benefit. If you are receiving Social Security disability benefits when you reach full retirement age, those benefits will be converted to retirement benefits.
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Apply For Retirement Benefits
Starting your Social Security retirement benefits is a major step on your retirement journey. This page will guide you through the process of applying for retirement benefits when youre ready to take that step. Our online application is a convenient way to apply on your own schedule, without an appointment. You can also apply by phone or by appointment at a Social Security office.
Documents You May Need To Provide
We may ask you to provide documents to show that you are eligible, such as:
- A birth certificate or other proof of birth
- Proof of U.S. citizenship or lawful alien status if you were not born in the United States
- U.S. military discharge paper if you had military service before 1968
- W-2 forms and/or self-employment tax returns for last year and
- A death certificate for the deceased worker.
We accept photocopies of W-2 forms or self-employment tax returns, but we must see the original of most other documents, such as your birth certificate. We will return the documents to you.
Do not delay applying for benefits because you do not have all the documents. We will help you get them.
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How Is Social Security Calculated
There is a three-step process used to calculate the amount of Social Security benefits you will receive.
Step 1: Use your earnings history to calculate your Average Indexed Monthly Earnings .Step 2: Use your AIME to calculate your primary insurance amount .Step 3: Use your PIA, and adjust it for the age when you will begin receiving benefits.
You can use a copy of your Social Security statement that provides your earnings history to plug your own numbers into the formulas below.
Adjust Your Pia For The Age You Will Begin Benefits
The final amount of Social Security retirement benefit that you receive is based on the age when you begin benefits.
Of course, another complex formula is used to determine how much more you will receive if you wait.
This formula uses your Primary Insurance Amount calculated in the previous step. This is the amount you will get if you start benefits at your full retirement age . Your FRA can vary, depending on the year you were born. For people born between 1943 and 1954, as in our example, the FRA is age 66.
For people born on Jan. 1, the FRA is based on the year prior. Someone born on Jan. 1, 1955, will have an FRA based on 1954.
A reduction is applied to your PIA if you begin benefits before your FRA. A credit, referred to as a “delayed retirement credit,” is applied if you begin to receive benefits after your FRA.
How To File An Application For Social Security Retirement Benefits
- In person: You will need an appointment in order to apply in person for your Social Security benefits. You will need to find and contact your local SSA office to make an appointment. Call to find the local office.
- Online: You can apply for Social Security benefits online anytime you choose 24 hours a day/7 days a week. This is, in fact, the easiest way to do so, but be aware that you may not be able to apply for all your benefits online. You might, however, need to complete the application either in-person or on the phone. The online system will tell you how to proceed.
The Disability Application Process
Whether you apply online, by phone, or in person, the disability benefits application process follows these general steps:
- You gather the information and documents you need to apply. We recommend you print and review the . It will help you gather the information you need to complete the application.
- You complete and submit your application.
- We review your application to make sure you meet some for disability benefits.
- We check whether you worked enough years to qualify.
- We evaluate any current work activities.
- We process your application and forward your case to the Disability Determination Services office in your state.
- This State agency makes the disability determination decision.
To learn more about who decides if you are disabled, read our publication .
Once You’ve Applied
Once we receive your application, well review it and contact you if we have questions. We might request additional documents from you before we can proceed
Look For Our Response
Youll receive a letter in the mail with our decision. If you included information about other family members when you applied, well let you know if they may be able to receive benefits on your record.
Check The Status
You can check the status of your application online using your personal mySocial Security account. If you are unable to check your status online, you can call us 1-800-772-1213 from 8:00 a.m. to 7:00 p.m., Monday through Friday.
Appeal A Decision
Who Is Eligible For Ssi
Anyone may apply for SSI. The SSI program provides monthly payments to people who:
- Are at least age 65 or blind or disabled.
- Have limited income .
- Have limited resources .
- Are U.S. citizens, nationals of the U.S., or some noncitizens.
- Reside in one of the 50 states, the District of Columbia, or the Northern Mariana Islands. Exception: The children of military parent assigned to permanent duty outside the U.S. and certain students temporarily abroad may receive SSI payments outside the U.S.
What Do I Need To Know About Advance Designation
You should be aware of another type of representation called Advance Designation. This relates to the Strengthening Protections for Social Security Beneficiaries Act of 2018, which was signed into law on April 13, 2018.
Advance Designation allows capable adult and emancipated minor applicants and beneficiaries of Social Security, Supplemental Security Income, and Special Veterans Benefits to choose one or more individuals to serve as their representative payee in the future, if the need arises.
To help protect whats important to you, we now offer the option to choose a representative payee in advance. In the event that you can no longer make your own decisions, you and your family will have peace of mind knowing you already chose someone you trust to manage your benefits. If you need a representative payee to assist with the management of your benefits, we will first consider your advance designees, but we must still fully evaluate them and determine their suitability at that time.
You can submit your advance designation request when you apply for benefits or after you are already receiving benefits. You may do so through your personal account, by telephone, or in person.
If Your Application Is Denied
After we review your application and the information you provided, we may decide you do not meet the qualifications for disability benefits.
If you disagree with our decision, you have the right to ask us to look at your application again. The notice you receive from us that says you don’t qualify will explain how to appeal our decision and the time period in which you must make the request.
If we decide you don’t qualify:
Because you are not disabled under our rules, you can appeal our decision online.
The online disability report will ask you for updated information about your medical condition and any treatment, tests, or doctor visits since we made our decision.