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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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Social Security Question I will be 66 in July of 2012. I

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Social Security Question: I will be 66 in July of 2012. I plan to turn in for SS in January of 2012 to get my full rate because I will be in the calendar year of when I turn 66. I plan to keep working, will I be penalized up to 50% of my benefit until July.

LEV :

Hi and welcome to Just Answer!
If you will receive social security benefits and will have other taxable income - your social security benefits will be partly taxable. The simple test is - take half of your social security benefits plus other taxable income (wages, self-employment income, interest in the bank, etc) - if the total is below $25,000 for single or $32,000 for married couples filing jointly - none of your social security benefits are taxable. If the total is above the threshold - part of your social security benefits is added to your other taxable income.
Because you will retire before the full retirement age which is 66 - your social security benefits will be reduced. As you will retire at age 65 + 6 months - your benefits will be 96.7% compare what you would get if retire at 66 - see here - http://www.ssa.gov/retirement/1943.html

LEV :

Because you will reach full retirement age in 2011, you are considered retired in any month that your earnings are $3,140 or less and you did not perform substantial services in self employment.


"Substantial services in self-employment" means that you devote more than 45 hours a month to the business or between 15 and 45 hours to a business in a highly skilled occupation.
If you will be an employee and after you will start your social security benefits your earnings will be less than $3,140 in any month - your social security benefits will not be reduced.

Customer:

I wasn't as concerned about taxable income as I was partial benefits because I will still be working full time.

LEV :

I covered all issues that might affect your benefits. I hope the information above will help you to make the best choice.

LEV :

Please be aware that if you apply in January of 2012 - the IRS might not provide information about your earnings in 2011 by that time - and you need to attach W2 form to your application.

LEV :

Let me know if you need any help or clarification.

Lev and other Tax Specialists are ready to help you

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