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emc011075
emc011075, Tax Adviser
Category: Social Security
Satisfied Customers: 3126
Experience:  Tax adviser IRS licensed Enrolled Agent and tax instructor
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How will capital gains affect my ss as individual with total

Customer Question

how will capital gains affect my ss as individual with total income of $23,000?
Submitted: 11 months ago.
Category: Social Security
Expert:  emc011075 replied 11 months ago.

Hi. My name is ***** ***** I will be happy to help you.

Are you asking if the capital gains will reduce your benefits or are you asking if the capital gains will make your benefits taxable?

Customer: replied 11 months ago.
will it reduce my ss benefits? I saw on line where I would not be taxed on capitol gains at that income? Is that true?
Expert:  emc011075 replied 11 months ago.

Ok. Those are two separate issue.

Capital gains will not reduce your benefits. Only earned income like job or self-employment can reduce your early benefits if you took your benefits before your full retirement age. Capital gains is unearned income. Your benefits will not be reduced.

Depending on amount of capital gains and your other income, up to 85% of your benefits could be taxable. Even if your capital gains will be taxed at 0% tax rate, it can still affect your benefits because capital gains will still be included in your total income.

How much of capital gains do you have and what's your other income and filing status?

Customer: replied 11 months ago.
income is $1700 in ss and $300 in retirement per month. The capital gains would be approx. $59,000 which I will give to my son and his wife as gift of equity all but $10,000.
Customer: replied 11 months ago.
sorry add extra $340 per month to ss.
Customer: replied 11 months ago.
I,m sorry don't add extra $340 I included it in $1700.
Expert:  emc011075 replied 11 months ago.

Ok. So you have 20,400 in social security income, 3600 in retirement income and 59K in capital gains. What's your filing status?

Expert:  emc011075 replied 11 months ago.

Also, are we talking about short term or long term capital gains?

Customer: replied 11 months ago.
short term capital gains and my husband (who passed away in April)and I did not have to file taxes the past two yrs
Expert:  emc011075 replied 11 months ago.

Because of the capital gains, 85% of your benefits will be taxable. If your husband passed away in April you will still be able to file married filing jointly. Is his income included?

Customer: replied 11 months ago.
Expert:  emc011075 replied 11 months ago.

Short term capital gains are taxed as ordinary income, so you will be looking at about $8000 in tax liability.

Expert:  emc011075 replied 11 months ago.

If you gift more than 14K to any of your children, you will also have to file gift tax return. Unless you already gifted 5.43M during your lifetime, there will be not gift tax but a return will still be required.

Expert:  emc011075 replied 11 months ago.

I see you read my respond. Do you have any questions? Is there anything else I can help you with today?