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Lane
Lane, JD,CFP, MBA, CRPS
Category: Social Security
Satisfied Customers: 12477
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial, Social Security & Tax advice since 1986
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My husband is an attorney and we file together as a married

Customer Question

My husband is an attorney and we file together as a married couple. He is 71 and I am 70. In 2014 he settled a case for $900K. Our social security benefits were cut almost in half based on increased Medicare payments. He is a sole proprietor. This year we had an income of $-77,259. When I visited Social Security I was given form SSA-44 to complete but none of the Life Changing Events seemed accurate. I was told that the amounts will not change until 2018.
Is this correct? I really appreciate any help you could give us.
Submitted: 4 months ago.
Category: Social Security
Expert:  Lane replied 4 months ago.

Hi. My name's Lane.

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The problem here is that Social Security doesn't get that taxable income number from IRS until well after tax filing time so they are always using a two year old return.

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But I have had some success (quite honestly some field offices are better than others) in having the client take in a client a signed, filed return, along with documentation that what caused the taxable income to go up being an atypical event (selling property, and IRA distribution) and speaking to someone in the office (WITH an appointment) to make the case.

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From the "What if My Income has gone down" section of the Medicare Premiums for higher income earners publication the last sentence of that section says. "If you filed a federal income tax return for the year in question, you need to show us your signed copy of the return."

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From that same publication, see this:

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"To determine your 2017 income-related monthly adjustment amounts, we use your most recent federal tax return the IRS provides to us. Generally, this information is from a tax return filed in 2016 for tax year 2015. Sometimes, the IRS only provides information from a return filed in 2015 for tax year 2014. If we use the 2014 tax year data, and you filed a return for tax year 2015 or did not need to file a tax return for tax year 2015, call us or visit any local Social Security office. We’ll update our records."

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I had one individual in exactly your situation come back here, after being told no in the first appointment, take the LAST year's tax return (2016), showed them the tax transcript as proof it had been filed, along with a copy of a signed return, and they adjusted the premium back down.

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Yes, they do list certain events. But showing that the year in question is atypical and using the following year's return (and pointing out that this is in line with returns filed BEFORE the atypical year... showing that the income has now returned to normal levels) is another tack that can work.

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The literature is very well written to err on the side of denying a claim for reconsideration.

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Don't let the form trump the substance. Don't use the SSA-44. Ask for an appointment and make your (well-documented" case.

Expert:  Lane replied 4 months ago.

Does your husband work? ... If this represented his last active case, the work stoppage LCE may be applicable.

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From the SSA POMS manual (Program Operations Manual): (HI 01120.030)

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"A beneficiary may request and qualify for the use of a more recent tax year to determine IRMAA based on a reduction in MAGI after the beneficiary, the beneficiary's spouse or both stop working"

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Further:

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If the beneficiary alleges he or his spouse has a work stoppage that will significantly reduce his MAGI for the current tax year, SSA will need MAGI and tax filing status information for the tax year he is asking SSA to use and proof of the work stoppage.

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A beneficiary may submit the following tax information:

  • An estimate of MAGI and tax filing status for the tax year they are requesting SSA to use (current year or PY-1), or

  • A signed copy of the PY-1 tax return (or a filed amended tax return with an IRS letter of receipt for PY-1) if PY-1 tax return shows a significant reduction in MAGI.

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SSA will accept as proof of the work stoppage any evidence submitted by the beneficiary that clearly documents the event such as:

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  • A statement from an employer,

  • A retirement letter,

  • Corporate minutes,

  • Record of business transfer or sale, or

  • Beneficiary's attestation under penalty of perjury regarding the work stoppage or employment separation."