tax refund for retiree

You haven't given us enough info to answer the question.

How much refund you get, or how much you owe, depends on your TOTAL income, your filing status, your allowable deductions and how much you've already paid in.

Most people don't have any income taxes withheld from their Social Security payments, so that normally reduces the amount of a refund or increases the amount due.

And when you have income from multiple sources - several jobs or a job and social security or a job, social security and a pension - none of the jobs that withhold income taxes take into account what happens on your other jobs. So job 1 withholds based on what they pay you and what you tell them your status is (for example, Married filing jointly with 2 exemptions). When you add your income from all your activities together you can easily be underwithheld because of this.

Additionally, how much of your social security is subject to income tax will be dependent on how much your other income. If your income is low enough, none of your social security is taxable, but if your income is high enough then up to 85% of your social security can be taxable.

Some of your FICA withholdings may be refundable but only if your income from multiple employers surpasses a certain amount - I think around $106,700.

None of your Medicare withholdings are refundable.

Gene E. Utterback, EA, RFC, ABA

Do you have a citation for this?

To actually answer your question, you may be eligible for some federal tax refund depending on actual income stc. None on the others.

Well, I can't speak for Gene but of the 225 returns I prepared as a volunteer last season, around 200 had SSA benefits. Maybe 5 of those had tax withheld. I can't recall when voluntary withholding started, but 5 or 6 is what I see every year.

"Gene E. Utterback, EA, RFC, ABA"

Well , Gene is wrong and Charilie is right. You won't get anything back from the first 3, but if your income is low enough you'll get the FIT back when fillling in your 1040 nest April.

ed

What about a potential earned income tax credit? Isn't that, in effect, a refund of fica taxes?

Although in the OP's position, their total income will (I hope) be high enough that it isn't an issue.

Short answer: No.

Longer answer:

The earned income tax credit, if any, is known in tax parlance, as a refundable credit. That means regardless of how large or little federal income tax you might have, you are guaranteed to get back the enitre EIC amount. So even if there was zero federal income tax withheld, you get a full credit of the EIC amount.

It is in no way considered to be a refund of FICA, and it is paid even if there were no FICA tax paid.

I live in Ohio. Let's say I get a job working for the State of Ohio and there is no FICA ever withheld. If I qualify for EIC, I still get EIC.

That is correct, of course. As implemented, EIC has no direct connection to FICA withholding.

However, in previous discussions in this group, it has come to light that when the EIC was created, the *intent* may have been to overcome the discouragement that a low-wage earner might feel upon seeing so much of each paycheck go to FICA, even if they owed no income tax. In other words, to *encourage* such worker to stay in the work force instead of quitting and trying to fall back on (other) forms of welfare.

This theory fits quite well with the concept of Advance EIC, which actually helps offset the payroll tax deduction with each paycheck, instead of in a lump at the end of the year. Alas, AEIC never became popular, was subject to relatively high rates of fraud (just like EIC in general), and so has been eliminated as of 2011.

Talking about intent when it comes to tax law is dangerous, maybe someone knows of Congressional speeches or debates where this intent was expressed by lawmakers.

-Mark Bole

(Discussing EIC)

There was a time when the EIC was tauted as a refund of employment taxes for low income wage earners. That's still true in some sense - the EIC for single people earning up to $6,000 per year is about 7.6%, which is a pretty good match for their FICA and Medicare withholding.

Of course last year's newly introduced Schedule M also provides a 6.2% credit for wage earners up to $6,451. And IIRC the Additional Child Tax Credit also has some tie-in with the amount of FICA withheld.

Gene's right. His answer is complete. If you had two jobs and in each you made less than 106,800 (that base wage changes each year), but together more than 106,700, then you get back a portion of your social security taxes paid. The reason is that social security tax only applies to the first 106,800 of your income (Obama once suggested he wants to apply it to all of your income). It's too bad that the company does not get a refund of their portion of social security that they paid for you. Similar thing with SDI. In CA, if each job paid less than $86,698, but together more than $86,698, then you get back the amount of SDI on income over $86,698. There's no way to get back medicare tax withheld.

From the current IRS home page on the EITC:

The Earned Income Tax Credit or the EITC is a refundable federal income tax credit for low to moderate income working individuals and families. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. When EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.

====================================================================== From the JCT explanation of the TRA of 1986 which modified the EITC:

The Congress concluded that further increases in the maximum amount and phase-out level of the credit were necessary to offset past inflation and increases in the social security tax. In addition,the Congress believed that an automatic adjustment to the credit to reflect future inflation should be provided, just as it is provided for the personal exemption, the standard deduction, and rate brackets, in order to eliminate the reduction in the real value of the credit caused by inflation.

But Congress declined to walk the walk.

Unlike the child tax credit for those with three or more children, which is tied to FICA w/h. EIC is not afected if the employer is exempt from FICA.

For 2009, EIC applied for Single/HoH taxpayers with no EIC qualifying child and earned income up to $13,440, $18,440 MFJ.

ed

Only anecdotal evidence based on my 30-years in the tax business, as a preparer with my own clients and as an instructor/facilitator/presenter in various seminars/conferences. Its been my experience that most people do not have any tax withheld from their Social Security benefit payments.

Gene E. Utterback, EA, RFC, ABA

Actually, Gene made NO PRESUMPTIONS about the OP's income.

I also have learned that what one considers minimal another may consider substantial. It would seem to me that if our friend at Microsoft only made $200K a year that he might consider that amount to be minimal? As the OP didn't give us any details, I tried to give him information so he could apply the rules to his situation.

Gene E. Utterback, EA, RFC, ABA

You've lost me with your comment about Congress not walking the walk. The fact that the CTC under certain circumstances is linked to employment taxes has nothing to do with what the intent of Congress was as it related to the EITC and its changes over time.

All I was trying to say, not well, is that if Congress wanted to implement EIC to make up for the burden of paying FICA, they could have restricted EIC to those who pay FICA.