This is my first year on Social Security and Iím already preparing to do my year-end tax preparation. Iím single and want to make the appropriate IRA withdraw. I want my benefit taxability basis to equal exactly $34,000 so that I maximize the 50% taxability without passing into the 85% bracket.
Question: if my monthly benefit amount is $2,500 and they are taking $105 out for Medicare so that my direct deposit is $2,395: will my SSA-1099 show a benefit of $30,000 (2500 x 12) or $28,740 (2395 x 12)?
The taxability basis calculation is half the social security benefit plus all of your other income. If SSA acts like a standard employer, the cost of medical insurance is a pre-tax item and does not count against you as income. Of course this is the Government and their job is to take advantage of us in every way then can, so Iím expecting the answer to this question to be $30,000.
Wed Aug 20, 2014 12:53 pm
Wino Senior Member
Cash: $ 113.80
Joined: 03 Aug 2012
I don't know the answer to your question, but if I were in your position, I wouldn't try to hit a specific number to within a hair on the first attempt. Why take the chance on paying an excessively high tax for $2000? Aim for $31000 or $32000, instead, then when you get your form, you'll know for certain for next year's strategy.
I liken your approach to someone who gets one of those "no interest if paid within a year" offers from a big box store, and then he tries to go 364 days before paying, only to have a glitch, and ends up paying a year's worth of 24.9% interest.
Again, "Why take the chance?"
Thu Aug 21, 2014 6:27 am
Cash: $ 380.25
Joined: 09 Feb 2009
I don't know how to answer your question either, except that the IRS.gov website offers a lot of calculators to determine your taxes. In fact, in 2012 I used their exempt calculator to determines how many exemptions I should claim so that I don't receive a refund or have to pay in and to my suprise the math came out to within $50.00.
Risk comes from not knowing what you're doing. (Warren Buffet)
Thu Aug 21, 2014 3:23 pm
fortenmerd New Member
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Up to 85% of social security retirement benefits may be include in gross income based on a measure of income known as the modified adjusted gross income.Deducted Medicare premiums do not reduce the amount of social security that is subject to tax.