Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything that is not clear.
I can direct you to a worksheet, but first a couple of questions.
Are you single or married?
Married and file jointly.
Does your wife receive social security benefits also?
No, she works part time as will I when I beging to receive benefits in November 2013.
OK, so for 2013 you will only have 2 months of benefits?
That is correct.
Also, can you give me a rough estimate of what your combined adjusted gross income will be for 2013 without the social security benefits?
That will determine how much of your SS benefits will be taxed, if any.
I presume that will be less in 2014 if you are retiring and only working part-time?
Also, what is your approximate combined monthly SS benefit?
Correct. I estimate my yearly income, including part time work and pension payments to be approximately $56,000. My wife would earn between $24,000 to $25,000. My social security is $1,572 per month.
So, without the SS benefit your combined gross income will still be 80,000 (56 + 24)?
Is the 1572 just you? So your wife will also receive 50% of that or does she qualify for her own benefit on her own earnings record?
I'm sorry, I included my SS benefit in the estimate of my yearly income after retirement. Our combined income will remain close to $80,000. My wife is still working but does qualify for heer own benefit on her own earnings.
Well, the bad new is that without even making the detail computation you will be taxed on approximately 85% of your benefits. Give me a minute to give you the link to the worksheet so you can fill in your estimated numbers and see how it is computed.
That one does the computations for you.
Any other questions I can help you with?
Just one. I was told that I automatically drop into the 15% tax bracket at retirement. Is this true?
No, it is based upon your total taxable income. You may be in the 15% bracket depending upon your itemized deductions & exemptions. There's no automatic "break" if you will.
OK. Thank you.
The computation of the amount of your social security that is taxed doesn't consider taxable income.
So, in your case it will be 85% based upon your other income & the amount of tax will depend upon what bracket your TAXABLE income falls in.
Here's a link to the 2013 tax brackets; the 15% bracket takes you to 72,500. & then it is 25% for any excess.
So The roughly 85% of my SS benefit that is taxable is not conidered with the remainder of our income when filing our tax return?
No, it is considered. It is just added as a component of your adjusted gross income on page 1 of your 1040.
The calculator I linked for you is just a planning tool; it figures the amount of SS that is taxable & the tax computation is just there for your information.
OK. Thank you for the information.
If you need to contact me again with any tax or financial questions, you can just ask for "Steve G" at the beginning of your question. Again, please remember to rate my response. Bonuses, where you think they are warranted, and excellent ratings, are always most appreciated. Thanks again for using JustAnswer.com.You may get a short survey from the site; if it isn't too much trouble I would appreciate it if you would answer it; the survey results are used to rate our performance;