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Four Unexpected Ways to Lose Your Social Security Benefits

MILLIONS of people depend on their Social Security benefits when trying to plan for their retirement.

Maximizing your Social Security benefits is important because your income depends on the age you apply.

Your Social Security benefits may decrease

1

Your Social Security benefits may decrease

Your benefits could drop significantly depending on a few factors.

1. State Taxes

While enjoying your retirement, you may be subject to your state’s income taxes.

And in some cases, your Social Security benefits count as your income and are subject to state taxes.

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There are currently 12 states that tax your Social Security: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia.

The rest of the 38 states don’t.

Meanwhile, in March, the Minnesota legislature unveiled a proposal to make Social Security payments tax-free.

It’s imperative that you prepare properly for your retirement, especially if you fall under one of the states that tax your benefits.

2. Federal Taxes

Many end up paying federal taxes on Social Security if they have other significant income in addition to Benefits.

This includes things like wages, self-employment, interest, dividends and other taxable income that must be included on your tax return.

Depending on your “combined income,” you may also have to pay federal taxes on your Social Security benefits.

Combined income is the sum of your adjusted gross income plus tax-free interest, plus half your Social Security benefits.

Combined income works in several ways:

If you are filing a federal tax return as an “individual” and your total income is between $25,000 and $34,000, you may be subject to income tax on up to 50% of your benefits.

Over $34,000, up to 85% of your benefits may be taxable.

If you file a joint statement and you and your spouse have combined income between $32,000 and $44,000, you may be subject to income tax on up to 50% of your benefits.

Over $44,000, up to 85% of your benefits may be taxable.

If you are married and filing a separate tax return, you most likely pay tax on your benefits.

3. Unpaid debts

The US Treasury Department has the ability to garnish your Social Security benefits for certain unpaid debts, including back taxes, child or spousal support, or a delinquent federal student loan.

Additionally, if you owe money to the IRS, a court order is not required to garnish your benefits.

If you owe federal taxes, 15% of your Social Security check can be used to pay off your debt, regardless of how much money is left.

4. Excessive Income

For many, the decision to retire means turning to their Social Security benefits as their primary source of income.

However, you can claim your benefits and continue to work.

For those who have chosen to continue working, be aware that your benefits may be reduced.

If you are under full retirement age (FRA) and earn more than certain amounts, your benefits will be reduced but not permanently.

If you are under FRA all year, you will be deducted $1 from your benefit payments for every $2 you earn over the annual limit.

For 2022, the limit is $19,560.

When you reach FRA, you will be deducted $1 in benefits for every $3 earned over another limit.

In 2022, that income limit is $51,960.

However, you only count your earnings up to the month before you reach your FRA, not earnings for the entire year.

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A new guaranteed income program could net you as much as $900.

We also explain five Social Security benefits you can claim online.

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https://www.the-sun.com/money/5011747/lose-social-security-benefits/ Four Unexpected Ways to Lose Your Social Security Benefits

CarmaHassan

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