Social Security Not Enough? Uncle Sam Still Wants His if You Earn More

If you receive Social Security income but just can’t seem to make your budget planning work, you may be considering a part- or full-time job to supplement your check each month. Earn all you can, but beware: if you haven’t reached full retirement age, and you earn above a certain amount, some benefits may need to be repaid.In 2017 the earnings limit is $16,920.  (Remember, the earnings limit isn’t affected by investment income.) Above this figure, Social Security income must be repaid at a rate of 50%; for every dollar over the limit, you repay 50 cents of your Social Security benefit.If you just started to draw Social Security in 2016, anything earned prior to collecting benefits doesn’t count towards the annual earnings limit.During the year you hit full retirement age, the rules change. First, you can earn more before you must repay the Social Security Administration: $44,880 in 2017. Also, the amount owed drops to a third of your Social Security benefit (you pay $1 for every $3 over the limit).Once you reach full retirement, limits become obsolete so your earning possibilities become limitless, with no need to repay your benefits.Since the repayment amount centers on “full retirement age” you may wonder if you’re nearing that age. The answer depends on your birth date. Use the Social Security Administration’s Retirement Age Calculator to determine your full retirement age.If repaying some Social Security benefit isn’t frustrating enough, “Wait, there’s more!” Your remaining balance might also be taxable. A quick way to determine if you owe tax: add half of Social Security income to all other income, including investment and interest income, and compare it to the base amount for your individual income tax return filing status.Base amounts are $32,000 for married filing jointly, and $25,000 for single and head of household. If your income exceeds these amounts, some of your benefits may be taxable. For a more precise calculation, visit IRS’ “Are My Social Security or Railroad Retirement Tier 1 Benefits Taxable?”If your income falls significantly above these amounts and you need assistance with retirement planning to minimize your tax obligation, the experienced accountants at Patrick & Robinson CPAs may be able to help. Contact us, too, if you’re approaching retirement age and wondering when’s the best time to start taking benefits.Reach us at Office@CPAsite.com or 904-396-5400.