social security and income question

Your Roth contribution is not deducted from either your taxable income or your social security income.

By the way, in the year you turn your full retirement age of 66, there is a higher amount of threshold and a diferent computation to make and you end up better off. And earnings after you do reach full retirement age are not subjected to payback.

Perhaps you were thinking of contributing and deducting from adjusted gross income, amounts contributed to a traditional IRA? That could reduce the amount of social security income subject to being listed as taxable income, but will not reduce the amount of payback you would owe to social security.

As this was posted to a tax group, there is one piece of information that the above left out:

If your income, INCLUDING SSRB, is less than $25k (or $32k if married filing jointly with a spouse), then your social security income remains tax free. However, such is not true if you file a married-separate tax return. Exceed those levels and it will start to become taxable (a phase-in), and if your other income before adding SSRB exceeds these limits, then your SSRB is included in your taxable income (subject to its maximum limits). If you have other deductions, exemptions, and credits that will wipe that out, then your income tax won't change.

Note that for the next 4 years (i.e. before you turn 70.5), you could use a traditional IRA, then convert it to a Roth (hopefully, you've stopped working then - as the conversion amount will be taxable) so as to avoid "required minimum distributions."

Sorry. Yes, I indeed meant to write "Traditional IRA" not Roth. So am I to understand that this will not affect what I will have to pay back to Soc Sec? In other words, if I earn19160 in income and put $5000 in Traditional IRA, it will not bring me down to the $14160 level I need to stay under so as to NOT have to pay $1 for every $2 earned back to Sec Sec? I will still have to pay back $2500 to Soc Sec even tho I put the $5000 into an IRA?

In that case I might as well pay Soc Sec back what I have collected since December & reapply when I quit work again. I'm 62, thought we planned ahead & saved a lot. "A lot" has decreased nearly 50% over the past 2 yrs.

SandyBeth

Not left out, see the original reply for someinformation on taxability of social security income. That of course is a diferent situation.

I'm sure you meant to say INCLUDING HALF YOUR SSRB

No indication here of marriage status

But if filing MFS and if lived with spouse at all during the year, then 85% of SSRB becomes income subject to income tax.

yes, that is correct.

Arthur Kamlet wrote: [///]

You will get higher benefits down the road (after full retirement age) if you do have to repay some of your benefits now due to your earnings before full retirement age. In other words, you don't permanently "lose" it, you just defer it, loosely speaking. Details here:

-Mark Bole

Actually, if the total with all of it is less than $25k, then the total with half of it will also be less than $25k.

I find it's easier to have the clients add all of it to compare to the limit than to halve it and add. Some clients are math morons.

That's why I left out "half" above. 85% isn't half.

Unless you die... Then you get zero. :-(

You should do the computations based on your SS statement. For some people, if they start collecting at 62, they may do better than if they defer to 65 or 68 as long as they die before age 80. This is why it's important to know one's family history and one's current health. What I found interesting is that for me, all three inflection points (for all three combinations of comparing two) occur within a year of each other. (I think the SSA mathematicians plan it that way). Therefore, if you have a family history of living past 80, retirement at 68 makes more sense than 62 or 65. These computations assume that the SSRB will be used for current expenses and not invested (in interest/regular dividend bearing things). It's difficult to "schedule death."