How to Pay NO TAXES on Social Security | Five Simple Strategies
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- čas přidán 1. 05. 2021
- This video discusses five simple strategies on how to pay no taxes on Social Security by using simple exceptions to Social Security tax rules. This video has the added benefit of help people reduce their traditional income so they pay lower taxes overall.
Social Security Tax Calculation Worksheet:
HolySchmidt.com/SSTax
States that Don't Tax Social Security Payments:
Alabama (no state income tax)
Alaska
Arizona
Arkansas
Delaware
Florida (no state income tax)
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Mississippi
Nevada (no state income tax)
New Hampshire (no state income tax)
New Jersey
New York
North Carolina
Ohio
Oklahoma
Oregon
Pennsylvania
South Carolina
South Dakota (no state income tax)
Tennessee (no state income tax)
Texas (no state income tax)
Washington (no state income tax)
Washington D.C.
Wisconsin
Wyoming (no state income tax)
Other Important Links:
Free "Retirement Ready" Checklist:
holyschmidt.com/checklist/
Federal Reserve Board Survey of Consumer Finances:
www.federalreserve.gov/econre...
Social Security Administration Application for Benefits
secure.ssa.gov/iClaim/rib
Current Social Security Cost of Living Adjustment
www.ssa.gov/cola/
Social Security Payment Estimator
www.ssa.gov/benefits/retireme...
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Disclaimer: this video is for educational and entertainment purposes only and is not meant to be a substitute for legal, accounting, tax, or professional advice. If you have any specific questions about any legal, accounting, tax or other professional service matter you should consult the appropriate professional services provider.
Very helpful. You can add Colorado to the list. Effective January 1, 2023, Colorado no longer taxes Social Security income.
Bottom line is seniors who make it to retirement and who have paid taxes all their lives and are earning less than 60k a year should be exempt from paying any taxes. Government should target Amazon and get them to pay their fair share of taxes.
Seems like a great idea...until I realize that companies do not really pay taxes. By that I mean their tax burden is an expense and like all expenses it gets factored into the price of the final product. So the _consumer_ pays for it.
@@beerbrewer7372 Exactly!
@@notpublic8961 Yea ok..what ever you say....you're the only one with their finances in order.
@@notpublic8961 Lol...ok will do.
NEVER HAPPEN.. Oligarchy will CRUSH YOU and use you bones for DOGY TREATS
Very thoughtful video, especially for lower income retirees.
It's appaling that any SS payment is taxed. We are all forced into it, it's funded by your tax payments, there is no investment return and payments are extremely low compared to private retirement accounts. And they have the nerve to tax it!!
That was Ronald Reagan’s doing!
You will get back FAR MORE from SS than you put in unless you croak out early. I paid about $104,000.00 in SS taxes over my career, with employers matching the same. I will get it all back in 59 months. I expect to hit at least 100, over 1.1 million in payments back to me, with increases for inflation. I don't mind paying $942. in tax every year. It is only those who have big pensions or investment income who get hit hard.
@@christinelachance8012 Assisted by - Senator Joe Biden!
@@TheAzmountaineer …Hardly! Biden was not a part of the commission formed by republicans under Reagan. The vote was 89-9…
@@christinelachance8012 He sure didn't vote against it. Biden was one of 88 senators who voted for it. That's an assist. Then in 1993, he also voted to add a bracket for the Clinton-backed bill for an increase up to 85%. Not a single Republican voted for that one. That's another assist for Joe.
Thank you, and yes, it is always great to see YOU!
Thank you for this content. Helpful, as always.
Really good insight.
After listening to this video and reading all the comments, I'm about 1000% more confused than I've been in years. Thanks! Clear as mud!
Use tax calculator every year to figure this stuff out. Use your estimated numbers of retirement, what your goal is
This will help you decide between when to take Social Security and when to contribute to a Roth and or traditional
I know right? After 2 minutes in, my head starts to spin, and I considered myself a fairly intelligent person, being a bookkeeper & retired as data analyst, and the this subject matter still boggles my poor, feeble mind. God help us seniorly citizens 😊.
Don't worry, this video doesn't seem to be very helpful if you're near or at retirement age. This is when you still have at least a couple of decades left and want to plan ahead, and also if you're lower middle class or lower with minimal retirement savings and income.
Just have a good cpa do your taxes, and they'll reduce your tax burden as the law allows. If you didn't already understand in a Roth IRA, or have investment properties or a significant mortgage, I didn't think this video helps you much from what I can discern. Just don't wait til we're giving you flowers to try collecting. It all depends on your unique situation, which is why you should get off CZcams and find a professional.
Everyone else, talk to your financial planners now, you have a few more questions to ask.
Great video. As someone who does their own complicated taxes, I understood it all. I’m glad you mentioned rental properties and depreciation. It often makes it look like we’ve lost money each year when we actually have money coming in just fine. This is GREAT for retirees! Plus, having held onto a rental property for many years, the equity has built up there just like own home, so we’ve got several pots of money available if we need them later in life. I encourage younger viewers to consider investing in rental properties, especially ones near you (not in a distant state!).
Very thorough presentation. TYVM
Always informative.. 👍
Thank you for your videos. They are very helpful.
I love your tax examples on the blackboard!
Always like your videos thanx!
Thank you!
All very good. May I also point out that getting out of debt during your income years reduces the amount of money needed in retirement so you can stay below the taxable threshold.
extremely good point. I can live quite nicely on my SS...if I have no payments like a house payment.
I want to build a diversified portfolio based on my personal income. I am easily triggered/highly emotional, which could be detrimental to my portfolio. I hope I am a patient and systematic person. day trading is not for everyone and multiyear holding is not for everyone. I know my strengths that's why I need proper guidance to be able to venture>>>
Exactly what I plan to do. Zero debt years ago, pay-as-you-go lifestyle and use savings as a hedge against rising future costs and emergencies.
Interesting information. Thanks for sharing
Good straight forward content.
Thanks Bill. I work hard to make sure that some of the ‘isms out there make sense.
Thanks for this information. I would like to see the very specific calculations for year relevant bend points, year by year calculations and other variables.
I retiring at 62 this 2022. Not waiting 70 coz i probably wont make it then. I dont might paying taxes as long as i see the road i drive always are well paved then i know my taxes is working for me. Thank you !!
Thank you for your expertise Jeff! 😁👍
You bet
@@HolySchmidt You mean to tell me that the only comment you can make after all these people have concerns on this topic is one who thanks you for your expertise is a five letter response, "you bet". Geez, oh Pete.
Thank you, sir!!
I think it is about criminal that we have to pay taxes on Social Security income.
Criminal? What law does it break, making it a crime?
@@suzanneemerson2625 You so funny
Thank you.
The North Dakota Legislature eliminated state income tax on Social Security benefits during a special session in November 2021. So, you can add ND to the list of states that do not tax Social Security benefits.
Jeffery: Fine job as always. Thanks
Thanks @BearWolf21 . I have some great stuff coming! I have been in the Cave for the last few weeks working to step up the content.
I'd like to hear more about the rental tax breaks!
Great information!! I do have a few questions though.
don't look for answers on here
Of no help to me but great that you are helping many.
Thanks Young for the comment. Most of the channel is for people already in retirement so take a look around and if you want me to talk about anything please let me know.
According to 2021 IRS transcript our income for that year was : $17,200 in wages (wife) plus $19,800 Social Security payments ( me & wife). It makes combined income in amount of $27,100. We have $4,900 "leeway" to add some interest e.t.c. and still pay no federal taxes on SS benefits (nor federal taxes at all). This year we purchased $40K worth of I-bonds ( $20K in "real purchase" and $20K as mutual gifts) . So, we can redeem them in 2023 @ ca. 8% interest without a problem.😀
Holy Schmidt! I was ready for a deep, deep math... 😊
The sstax link you reference is a dead end.....thanx
Looking Good 😌
Great video. As someone who does their own complicated taxes, I understood it all. I’m glad you mentioned rental properties and depreciation. It often makes it look like we’ve lost money each year when we actually have money coming in just fine. This is GREAT for retirees! Plus, having held onto a rental property for many years, the equity has built up there just like own home, so we’ve got several pots of money available if we need them later in life. I encourage younger viewers to consider investing in rental properties, especially ones near you (not in a distant state!).
Good info, thanks! It seems that minimizing SS tax runs the risk of over-optimization, where you tweak one number at the expense of others. Reduction of the overall, lifetime tax burden is a step in the right direction.
It doesn't help me at all since my pension already over 44,000. I have to pay 85% of SS. Traditional IRA is tax free when you contribute. If I buy Roth, I lose the benefit of tax free. Just the matter of paying early or later.
I would not complain about a 44k pension
@@Dsuji245 crying all the way to the bank. There are plenty of people living only on ss.
Collect state income tax on Social Security payments to at least some beneficiaries,
Colorado,
Connecticut,
Kansas,
Minnesota,
Missouri,
Montana,
Nebraska,
New Mexico,
North Dakota,
Rhode Island,
Utah,
Vermont and
West Virginia
Thank you
You left CA off your list. They may tax everything else but they do NOT tax social security retirement benefits. YAYYYY❗‼
. My husband's soc sec. is taxed 15%. They do tax soc. sec.
Who is crazy enough to live in California just for a small tax break?
@@angusblack9900 Calif does tax ss benefits.
@@creswhiteside3749 Federal taxes SS, not CA
QUESTION: Are pensions (such as: military or federal/state) taxable or considered income to calculate your SS tax? I love your show ! Thank you for all this great INFO !
Pensions are usually taxable income.
Yes
Any pre-tax monies factor into your MAGI for tax purposes.
A little background. Social Security used to be tax free. But other retirement accounts were not. Things like pensions and annuities. So, in 1983, the government set out to start correcting this and making it a level playing field so to speak. Since people only pay half of their tax (their employer pays the other half), they set the amount that could be taxed at 50% maximum. They set the threshold fairly high so that only 1% of retirees had to pay the tax. They deliberately did not index the threshold to inflation so that EVERYONE eventually will be paying some tax on their Social Security. Then in 1993, the chief actuary of the government did some calculations and determined that most people’s total contributions toward their benefit would only be about 15% of what they eventually received. So they could safely raise the amount subject to taxation to 85% without causing double taxation. So, whether you agree with what they did or not, know that there was method in their madness. They didn’t just make this up out of thin air.
Thanks for the comment
The government always needs every penny it receives, but never receives every penny it needs.
Thanks for the explanation. So by paying tax on the 85% of my Soc Sec, I'm paying my 'fair share'. Makes sense to me.
@@lilcanada273 If you are having to pay tax on 85% of your benefits then you have considerable income. Maybe you should be thankful for that and realize that there are people living in their cars.
Thank your man Biden on your SSN taxes!
Schmidt, you always deliver.
All he did was deliver more confusion.
Helpful
Yes a Roth is a great planning tool for some people. But most people pay less tax in retirement.
And for many investors a traditional is great to take advantage of the lower tax brackets and then you use a Roth for the rest. It's not an either or but a combination of the two that works well for many
Wow this video was awesome . This guy did all kinds of talking but I really didn't learn ishhh. He managed to do all that talking while it teaching swuat.
Thx for the vid
I used to know a William McCaslin when I was in the Navy.
@@Welder-4956 Wrong one, I was AIR FORCE, E-4
Great to hear you. Reductions are good if you have IRA's from long ago. I have stock that went bank rupt 6 years ago. yikes
If you have savings that you have already payed taxes on (normal savings outside 401K or IRA), you can use that to supplement other taxable income and keep yourself in or near a zero tax bracket. I anticipate having a zero tax bill for many years into retirement until my minimum distributions push my “income” up.
That's my plan exactly.
Same here
But isn't savings a money loser because low/no interest and inflation?
@@toddb6576it’s nice to have cash when you need it instead of 22%+ APR on a credit card or have to tip into your tax-advantaged account when you weren’t planning on it.
Hi California doesnt tax Social Security. I don't see it on your list. Great videos im addicted. Thank you for this service!
CA absolutely taxes SS. Don’t be fooled.
I think it's important to stick to stocks that are immune to economic policies. I'm looking at NVIDIA and other AI stocks. It seems AI is the trajectory most companies are taking, including even established FAANG companies. Maybe there are other recommendations?
So basically, there's no way of reducing taxes on social security. Not taking SS is a wonderful way of not paying taxes. Not living in a house is a wonderful way of not paying property taxes. And not driving a car is a wonderful way of not paying the gas tax. And not eating is a wonderful way of not having a high grocery expense.But if you do any one or a COMBO OF THESE NORMAL THINGS IN LIFE, HOLY SCHMIDT, YOU'RE SCREWED.
I am an accountant and that's exactly what I was thinking. I kinda tuned out when I heard that "not taking SS payments is a way to avoid paying taxes on your SS income. DUH!
@@rnstoo1 I'll never forget one of my accounting courses where our professor Wallis said his wife came home wearing a new hat, and when coming into the living room said, look Jim, I just saved 30 dollars! And he said, how much did you spend?
Well there are a few things you can do. Note contributing to an IRA still works although that only works for 7K annually. I believe he did not mention that your basic deductions still count(std deduction of 12400 or 24800 if married, charitable deductions etc.). As well he didn't even go into it properly as taxed would not be the correct term. I believe it is "withheld" and will be added into your benefits increasing your benefit slightly(ie it is prorated out by some formula).
If you make more money you pay more taxes, but you still end up with more money. To me, that’s not a bad thing.
@@hardykornfeld1733 I agree. never complain about paying taxes. That's an indication that you're earning an income. if one doesn't want to pay taxes ever, quit your job and head to the mountains and forage on wild things.
It is outrageous that we pay tax on what was originally a tax. We can thank Reagan for this regressive taxation. Congress should eliminate the tax, immediately.
I don’t consider SS a tax, as it funding retirement.
@@dramirez1154 Correct. It is the result of a legally required investment.
@Dan Theman Reagan signed the bill!
@@lynnebucher6537 Which came from Congress.
I am taxed on any money I put into investments. Does that mean all proceeds must be tax free?
cmon, put your big boy pants on.
I am interested also in info about double taxation treaties for either Uk/USA or USA/Spain. Also for a long term green card resident who leaves the USA for retirement
My mom's accountant depreciated her rental property for 28 yrs. The local property values were quite high when she finally sold her rentals. She owed $55,000 in back taxes. The loan to pay the IRS (because of her age) required a monthly payment of $1,000. Be careful about depreciation... if you're maintaining your rentals in a robust market, depreciation might not actually be happening. !
It probably isn’t if you are maintaining the property. Good point to note. The tax break is good but your basis goes down
Each year you are required to depreciate rental real estate per IRS. She's lucky the values were high when she sold but it sounds like your mom kept taking the profits before she sold. Possibly the rental was refinanced and she was using the proceeds to live on.
I don’t believe depreciation is a requirement. We own a rental apartment and I have never took the depreciation for fear of owing money when I sell it. I would assume that once you sell, you would owe back those dollars to IRS.
I don't weep for people who own multiple properties. I can't afford to buy one.
In California the tax base can be stepped up upon the passing of the owner, they just have to die unfortunately. I’m in this process currently on an inherited home the family has had for years and can’t wait to get out of the rental business before California strips away more of the property owners rights. I actually never heard of anyone not taking depreciation on a rental property!
Don't forget about the IRMA tax. It will make your Medicare premiums go through the roof. It will also add a tax to your part D even though you are not using part D.
This is quite true. We sold our farm and
Ended up not only paying a hefty tax in Fed and state but also was penalized at the tune of $1000 per month out of our social security for an entire year. We are in our seventies so this is significant loss. It’s not fair r easonable.
Thanks for the videos!!
When I view my "SS Retirement Calculator" can I correctly assume the 8.7% COLA is not included. So if it estimates $1000/mo benefit It should be $1087.00. Right?
It’s insane that our government taxes seniors on any amount …. Pitiful
Why should stock market gains be tax exempt, just because you're a certain age?
Well, no, Seniors hold the bulk of the Wealth, and often enough pass it off to their feckless offspring. The 20% of the Seniors who are doing very well, and the 1% of the Seniors who are doing obscenely well, should all be taxed commensurately. I'm in that "20%" group, and I agree with the taxation.
@@darylfoster7944 They aren't.
@@geraldclough2870 Yes, but the original poster on this piece of the thread was suggesting they should be. That was his point. They aren't exempt, for good reason.
And who do you think should pay taxes? The parents with kids? Disabled? The young people with low-paying jobs?
Virginia doesn't tax federal SS payments.
Social Security Act and Equivalent Tier 1 Railroad Retirement Act Benefits
Virginia law exempts Social Security and Tier 1 Railroad Retirement benefits from taxation. If you were required to include any of your benefits in federal adjusted gross income, subtract that amount on your Virginia return.
I'm 75 & only paid on 66% of my & m y wife's SS benefits from age 62 to 70 1/2, when the Gov.t forced us to take the RMD (required minimum distributions) from our IRA"s, 401K's!
Now, even though we essentially only have that extra, unneeded money, we must pay on 85% , i.e. the maximum on Soc. Sec. benefits! Also, we lost the "enhanced STAR' reduction for
seniors on our real estate taxes, due to that few thousand dollar increase in total income. They never told people in the 1980's, ( WHEN IRA'S, 401K'S, 403B'S, ETC) started, that they
might cause a loss in income, from other souces, in the future!
Can Holy Schmidt do a video about drawing SS, while living abroad (either part time or full time)? What are the limitations?
- Are there certain countries that can't live/visit to collect SS?
- Besides citizens, can residents also collect SS if they are residing in another country?
- How long can you visit/stay out of the US before losing SS (citizen... resident)?
just have benefits deposited to bank that has presence in the US and then transfer to your foreign bank, western union, whatever, as needed. for a citizen, you will never lose your benefits. for permanent resident, the issue is losing your residency. just search for the conditions under which one can potentially lose residency or be denied re-entry.
You don't lose your SS because you leave the US. You will lose your medicare coverage living overseas. Banking is the area to do some homework. The US government has imposed rules that many foreign banks don't want to deal with on US citizens. So you may have trouble opening/keeping a bank account in a foreign country which you would want to do for long term stays. ATM fee's and exchange rates are also a costly learning curve. Many UK citizens living overseas took a big income decrease because BREXIT in the UK hit the exchange rate. Don't be surprised if your US ATM card doesn't work after you land in a foreign country. Tell your bank you will be traveling in advance so they don't think the card was stolen and put a hold on it! I have CapitalOne and a Charles Schwab checking account precisely because they work better for travelers .. I would consider it essential to have a US mailing address too for dealing with the US government and financial institutions. Mail forwarding centers should be something you know about. Read expat forums online for current informations about the country your traveling.
A bank account with USAA is beneficial because it was established for members of the US military. You do not need to be a member of the military to open checking and savings accounts.
@@resourcefulqueen to have a USAA account you have to be active military, honorably discharged veteran or an eligible family member of the same. Not just anyone can join.
The only way you could lose your SS is renounce your citizenship or go to one of the countries it’s not allowed. A list can be found on social security website.
I appreciate the useful information. What does it imply when we say that 85% of SSN benefits are taxable? Does this entail that 85% of SSN benefits will be considered income and subject to both federal and state taxes? So, in 2022, if our total income is under $83,550 for joint filing, I 'll pay 12% federal tax, right?
SS benefits, not SS Number. I don't know where people are getting that from.
Good information!
@Laurence Egerton thank you for the kind words
Seems like a great idea...until I realize that companies do not really pay taxes. By that I mean their tax burden is an expense and like all expenses it gets factored into the price of the final product. So the consumer pays for it.
Yea.....it's a business, that's how businesses work. What people don't realize is companies like AMAZON CREATE JOBS, thus, creating TAX PAYERS who pay taxes on everything they consume. These tax payers also spend their income at stores and restaurants which create jobs at smaller companies which creates even more jobs which generates even more tax revenue.
@@nodrama7636 True. The Government requires that all businesses incorporate and collect TAX REVENUES from the employees and customers.
The link to your SSA tax calculations doesnt work (404 page not found). Is there a better one to use? Please advise. Thx!
Good morning Mr. Schmidt. I was wondering if I'm paying into my S.S. I work for a company that gives us a K1. So we're basically contractors. I get a paycheck twice a month. So I have steady income. When I pay my taxes at the end of the year, am I paying S.S. with some of the taxes I pay or is it all going to Federal Taxes? If I'm not paying any S.S. how can I make sure I am paying S.S?
I live and work in Alabama and I can assure you that Alabama does have a State Income Tax!
He didn't say you did not have a state tax he says Social Security money was not taxed
You are correct that Alabama has a state income tax, I think he meant to put that designation for the next state down the list which is Alaska.
Thank you for all the helpful information about social security benefits. I’ve taken my SS benefits since I was 62. I’m considering withholding my SS benefits until 70 years old when I reach my full retirement age. I hope you’ll have a video about withholding social security benefits. I haven’t seen this topic addressed largely on CZcams. I think there’re many people in the same boat as I who is looking for a better understanding about this matter. I hope you’ll have a video on this topic soon. I appreciate your help.
He only told you half the story! Taxable income does not mean you pay taxes! Take the money and run! Its another 8yrs to break even after FRA!
just take the money and run. It's not gonna be there in the future.
I live in CA and SSA retirement income is exempt! Why didn't you point that out? 😎
Shut up. FL...the land of anti vaxx.
I have always said, its not what you make but what you owe!!!
Is it the same for SSDI ?
When applying for SS you get a certain amount you can make before paying income tax. Mine is 17 K I'm living on a grand of SS & saving $$. SS is && intended to be a Gov slush fund.
Any mention of income limits precluding a ROTH?
Which state would be cheaper to retire in tax wise if renting, California or Utah?
Are those amounts AFTER YOUR STANDARD DEDUCTION, or just flat out?
As a married couple is the traditional income also you spouse's income who is not drawing ss?
In short, if you make too much and do not have 401k etc, Social Security is 85% taxed. Is that correct?
My plan to reduce SS taxes is to keep taxable income low by taking Roth distributions if I need more income over a certain level.
Yes Lynne taking ROtH distributions will not affect your taxable income, but if you have other IRA's you will be required to make minimum distributions in order for the govt. to get their cut of taxes. If you can afford to, try not to touch your ROTH account because it could be your best tool for continuing to earn tax free income and not pay tax on it. You can never put back what you take out of the ROTH account unless you have earned income in your retirement. Just try not to touch that all important ROTH.
Is your calculator updated each year?
I agree. SS should not be taxed.
@HolySchmidt I live in a state that does not tax social security. My question is do I have to report it? I just moved here. Thank you.
Can you convert traditional 401(k) into a Roth little by little, year after year to lessen the impact of conversion?
Yes and it's the best way to do it so you don't get yourself in a higher tax bracket as well!
That’s why many and many Americans are moving abroad once they retire . I am planning to do the same and since I am a dual national I will take advantage of my Italian citizenship perks that will allow me to settle anywhere in the world , unlike the American one .
HAVE YOU STUDIED OTHER COUNTRIES, AND THEIR CULTURES TO FIND OUT WHICH ONE MAKES YOU THE HAPPIEST?
But even with 5, 7, 9, 10 additional nationalities, if you are a U.S. citizen, you will be taxed abroad by the US...
@@alexgottmituns7049 first of all I don’t disclose my assets which are safely put out of reach overseas and NOT under my name! Second , I will renounce to the American citizenship in time ( although it will be costly , $2700 as of now !!!). Third and most important point I have NO TIES here in America ( other than my current working situation ): I have no children , nor brothers and sisters , I am not married and all my relatives live overseas so even with my American passport void I could keep living my life like before with no issues at all . Before saying CIAO - CIAO fir good to Gringolandia I will sell my property here , close my checking account and all credit cards accounts ,transfer all my money somewhere overseas ( I am already working in getting my PERMANENT RESIDENT visa in a country that has an exclusive bilateral treaty with Italy and NOT with the US which such country does like much to start with !) and “ leave the premises “ for good , as I like describing my escape from America.
@@lostinmyspace4910 my friend , I am not a gringo , I live in America but I was born and raised in Italy and I travelled all over . I speak fluent Spanish , understand Portuguese and French and Italian is my native language . I am already in a better position than 90% of Americans just because of this multilingual skills of mine ….
@@itadrummer1 Giuseppe...All family from Terrasini, Palermo, Sicily. And Mazara Del Vallo, Sicily.
Having trouble finding that spread sheet you mentioned that is on your web site?
I wish I had paid more attention to things like this when I received life insurance money from my husband. A financial advisor at my credit union had me open a traditional IRA, and it really didn't help me as far as I can tell. Unfortunately that entire account is empty now, partly because I had to pay so many taxes.
I’m in Washington state. What would happen with my SS and pension? Thanks
Hello Geoffrey, thank you for all your video on SS and retirement financial management. They are very helpful. I have a question about the "Provisional Income". Here is my scenario, I plan for early retirement (age 62) and will have a part-time income around $20K per year, my wife will continue to work and receive $40K per year. We file as married joint. Question 1: is the provisional income the sum of my part-time income and my wife's income? Question 2: when SSA withholds my SS benefit based on my earned income (exceeding the limit), do they base on my individual earned income ($20K) or combined income (20K+40K)? Will appreciate your guidance. Thank you.
DONT TAKE SS at 62.
Be advised that once you start collecting social security, your monthly benefits will not go up if you continue to work. So you will still be contributing to social security through your job and not benefiting ever in an increased monthly payment.
@@richardpiette9172 If you start collecting before FRA and continue to work any SS tax you pay into social security will increase your benefit.
@@richardpiette9172 Not true
@@richardpiette9172 that is not correct!
Hello... I do not see that spreadsheet you mentioned for the tax calculation. Even when I searched your website. Thank you
You can add New Mexico to your list now too.
In Colorado, starting with the 2022 tax year, those 65 or older do not pay taxes on SS benefits.
Question: once you are taking money out of your profit sharing plan, is it better to roll over your profit sharing plan to an IRA ? Why?
If my spouse draws disability, how does that affect us? The disability income is non-taxable, so would that just reduce the combined income?
When your combined income is over the threshold, your SS is taxed in certain percentage, up to 50% or 85%. But it does not mean that you end up pay any tax because all kinds of deductions. At least everybody should entitle to take STD deduction, which is roughly $12000 for single and $24000 for a couple. Am I right?
If you have rental property, you can sell your home and $250,000 is tax free or for a married couple $500,000. Now move into your rental for 2 years and it is now a primary residence not a rental. You can live off the gain tax free for years. Use this plus Social Security to live on tax free. Don’t withdraw from your 401k/IRA until 70 1/2 when it is required.
Sagely advice.
I think many do just that 👌💰
@@jamescalifornia2964 I knew lots of people with city/suburban homes and a vacation home. Too defray costs they would rent it out for 2 weeks tax free and then use it themselves the rest of the year. At retirement sell city/suburban home, mostly capital gains free live in the vacation home for 2 yrs and then sell it, once again, no capital gains. Livin’ the life!
You can wait longer than 70 1/2 now. I think it's 73ish.
@@CynthiaIvers thank you, good to know.
I thought municipal bonds were tax exempt, even of held in a taxable account. What am I missing?
Jeff, what about your standard deduction? Doesn't that figure in somewhere as well to reduce your combined income?
No. First you calculate your “combined income”, which is used to calculate the taxable portion of your social security benefits. THEN your deduction (standard or itemized) is applied. So your standard or itemized deduction doesn’t change whether part of your social security benefits are taxable. I think that was your question.
@@dorothyyoung8231 But it does change if or not you will actually pay any taxes on it. If your total taxable income, even with the taxable portion of SS, is less than that, you would pay no tax.
Great channel. Excellent topics and advice. However, one observation. Has anyone noticed how similar Holy Schmidt is to Dr. Todd Grande? I did a double take when one immediately followed the other on my playlist.
Alaska has no state income taxes as well
Thanks much for this video! It's a big help!
At 4:46, wouldn't 56,600 - 32,000 be 24,600 instead of 44,000? I dob't see where you came up with 44,000.
Married is not an IRS filing status. Married Joint and Married Separate are. Which one are you using in your example?
Tell us more about hsa how do we benefit from an HSA if we can't access the money in it except for medical exspenses
Did I misread a booklet from the Social Security Administration that stated I can no longer contribute to an HSA after I enroll in Medicare?
Good info. The link to the worksheet doesn't work.
Can you (or have you already) talk about the best strategies to use when your employer offers both 401K and Roth 401k (both include company match)? For example, my wife and I currently put 50% into each so that we reduce the taxes we're paying now a bit but also allowing for tax-free growth in the future. I'm wondering if this is a good balance or what I should be looking at to determine the best strategy to use. I also have the option of an after-tax, non-Roth (tax deferred) contribution, but I haven't heard too much about this option - do you have any insight into that type of account?
From what I’ve heard, the employer match goes into a regular 401k even if YOU are contributing to a Roth 401k......
Simply use a tax calculator online and fill in the information with your estimated numbers and your age of retirement. Use both data if you use a Roth and if you use a traditional. Remember you can save more if you use a traditional assuming you're not maxing out your accounts. You save more traditional because you're not paying taxes as you go. Taxes are a personal thing and not a cookie cutter advice thing
Putting it all in the Roth 401k will be better in retirement
Go with the Roth
Short answer: work with someone who can model your income and taxes through your retirement years. You have to pay taxes at some point - pay them when you're in the relatively lower tax bracket, either today (Roth) or in retirement (traditional). Contributing to both gives you flexibility if you're not sure yet. The main reason to contribute to an after-tax non-Roth 401(k) is if you want to contribute more than the max annual limit, which applies to the traditional and Roth plans.