December 14, 2024 Breaking News, Latest News, and Videos

Ask Rusty – Collecting SS and Income Taxes; early retirement and working

Dear Rusty:  My husband just starting collecting Social Security at his full retirement age. If he wants a part time job how much money does he have to stay under not to mess up his SS income? Someone told us he can make as much as he wants because they changed the law but my sister can only make up to a certain amount so we are concerned.  I am taking an early retirement, I will be 62. Do the same rules count for me as to how much money I can make after drawing SS?
Signed: Collecting but Still Working  
Dear Collecting:  Since your husband has reached his full retirement age, he is no longer subject to Social Security’s earned income limit; he can earn has much as he wants and it will not affect his Social Security benefit payments.  However, it may affect how much of his total Social Security income is taxable when you file your Federal Income Tax.  Assuming your income tax filing status is “Married Filing Jointly”, if your combined Adjusted Gross Income (including 50% of his annual Social Security benefit) is less than $32,000, none of his Social Security income is taxable.   If, however, your AGI is between $32,000 and $44,000, 50% of his total Social Security benefit is taxable as income; and if your AGI is more than $44,000, up to 85% of his total benefit becomes taxable income.  I suggest you speak with a Tax Advisor about how additional income from part time employment, when added to your other income sources (pensions, etc.), may affect the tax liability of your husband’s Social Security benefits.
Now as for you taking early retirement, note first that if you start your Social Security benefits at age 62 you will only receive about 74% of what you would otherwise get at your full retirement age (FRA), and this reduction will be permanent.  Also, when you file for benefits you will be “deemed” as filing for both your own benefit and any spousal benefit you may be entitled to from your husband’s work record.  But if you do retire early, the rules for working while you’re collecting Social Security are different.
Until you reach your full retirement age of 66 and 2 months you will be subject to an annual earned income limit, which for 2017 is $16,920 (this amount is subject to change each year).  If you earn over this amount for the year, Social Security will take back $1 for every $2 you earn over the limit by withholding future benefit payments.
The earnings limit and penalty for exceeding it become more generous during the year in which you reach your full retirement age: the earnings limit goes up to $44,880 (2017 amount) and the penalty is less – $1 for every $3 over the limit.  And of course, like your husband, once you reach your full retirement age you can earn as much as you want without penalty, but you should always take into account the effect of working on the tax liability of your Social Security income.  I’m not suggesting you shouldn’t work, only that you should understand the affect working has upon your income taxes.  Just like at work, you can choose to have income taxes withheld from your Social Security benefits, if appropriate.
in Opinion
<>Related Posts

SM.a.r.t Column: Climbing The Vertical Learning Curve

December 8, 2024

December 8, 2024

The city is facing a financial crisis, the roots of which stretch back decades but have been made worse by...

SM.a.r.t Column: It’s Time To Inspect Balconies

November 24, 2024

November 24, 2024

About nine years ago, a fifth-floor balcony in a Berkeley apartment building collapsed, tragically killing several students gathered on it...

S.M.a.r.t Column: Your City is Broke

November 18, 2024

November 18, 2024

On December 10, the new City council will be seated fresh from their dominant win in the recent elections. There...

SM.a.r.t Column: Moving Ahead to the Future

November 10, 2024

November 10, 2024

As we write this, the election results are still trickling in. We’ll leave the deep analysis to others, but the...

Opinion: Fact Check: Why Vote Yes on Measure QS

November 1, 2024

November 1, 2024

Despite living in a famously progressive region, Santa Monicans are not immune from the same political misinformation and disinformation that...

SM.a.r.t Column: Lack of Oversight and No Accountability

October 31, 2024

October 31, 2024

S.M.a.r.t. periodically invites guest columnists to write opinion articles on topics of particular interests to our readers. Below is an...

SM.a.r.t Column: “Help! I’ve Fallen, and I …!!”, Cries Santa Monica!

October 25, 2024

October 25, 2024

Maybe fallen, but slipping for sure from being a desirable beachfront community that served all equally, the local residents who...

SM.a.r.t. Column: Vote

October 13, 2024

October 13, 2024

In a polarized country or City every vote counts. Regardless of which side of any issue or candidate you support,...

SM.a.r.t Column: Fact-Checking Election-Season Windbaggery

October 6, 2024

October 6, 2024

Claim: The state is requiring Santa Monica to build 9,000 apartments.Answer: Partially true, partially false. Santa Monica has a pretty...

SM.a.r.t. Column: Public Safety and Traffic Enforcement Can Help Save Lives and Revitalize Santa Monica’s Economy

September 29, 2024

September 29, 2024

We wholeheartedly endorse the candidates below for Santa Monica City Council. Their leading campaign platform is for increased safety in...

SM.a.r.t Column: Crime in Santa Monica: A Growing Concern and the Need for Prioritizing Public Safety

September 22, 2024

September 22, 2024

By Michael Jolly Over the past six months, Santa Monica has experienced a concerning rise in crime, sparking heated discussions...

SM.a.r.t Column: Ten New Commandments

September 15, 2024

September 15, 2024

Starting last week,  the elementary school students of Louisiana will all face mandatory postings of the biblical Ten Commandments in...

SM.a.r.t Column: Santa Monica’s Next City Council

September 8, 2024

September 8, 2024

In the next general election, this November 5th, Santa Monica residents will be asked to vote their choices among an...

SM.a.r.t Column: Part II: The Affordability Crisis: Unmasking California’s RHNA Process and Its Role in Gentrification

September 2, 2024

September 2, 2024

Affordability: An Income and Available Asset Gap Issue, Not a Supply Issue (Last week’s article revealed how state mandates became...

SM.a.r.t Column: Part 1: The Affordability Crisis: Unmasking California’s RHNA Process and Its Role in Gentrification

August 26, 2024

August 26, 2024

In the world of economic policy, good intentions often pave the way to unintended consequences. Nowhere is this more evident...