As they prepare to retire, millions of individuals rely on their Social Security income. However, be wary of these four unanticipated methods that can affect your benefits.
1. State and local taxes
You may be required to pay state income taxes during retirement. Your Social Security benefits may be deemed income and subject to state taxes in some instances.
Only 12 states tax Social Security benefits, including:
- Colorado
- Connecticut
- Kanas
- Minnesota
- Missouri
- Montana
- Nebraska
- New Mexico
- Rhode Island
- Utah
- Vermont
- West Virginia
Your benefit will not be taxed in the other 38 states.
2. Federal income taxes
You may be required to pay federal taxes on your benefits if you have other considerable income in addition to your benefits. Your total income is computed by adding your wages/self-employment income, dividends, interest, and other taxable income. The amount of federal taxes you must pay on the benefit is determined by your total income.
3. Debts that have not been paid
The US Treasury can “garnish” your Social Security payments for certain unpaid debts, such as back taxes, spousal or child support, or a defaulted federal school loan.
They don’t need a court order to have your benefits garnished if you owe the IRS money. If you owe federal taxes, you may lose up to 15% of your Social Security payout to cover your debt.
4. Excessive Income
For many people, retirement means relying on Social Security as their primary source of income. You can, however, continue to work while claiming your benefits.
Keep in mind that if you choose this option, your benefits may be reduced by up to $1 for every $3 you earn. When you file your Social Security claim and reach full retirement age (FRA), you will determine how much you get and how much you lose.
Contact Information:
Email: [email protected]
Phone: 2178542386
Bio:
Bill and his associates of Faith Financial Advisors have over 30 years’ experience in the financial services industry.
He has been a Federal Employee (FERS) independent advocate and an affiliate of PSRE, Public Sector Retirement Educators, a Federal Contractor and Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants.
Bill will help you understand the FERS Benefits and TSP withdrawal options in detail while also helping to guide you in your Social Security choices.
Our primary goal is to guide you into your ment with no regrets; safe, predictable, stable and for life using forward thinking ideas and concepts.
Bullet points:
> Financial Services consultant since 1984
> FERS independent advocate and an affiliate of Public Sector Retirement Educators (PSRE), a Federal Contractor and Registered Vendors to the
Federal Government
> Affiliate of TSP Withdrawal Consultants
> His goal is to guide individuals into retirement with safe, and predictable choices for stability using forward thinking ideas and concepts.
