First year claiming Social Security and working in same year

Forum|Forum|2 years ago
February 4, 2024
2 replies
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I am doing my taxes and IRS is including my income that I earned in the same year I started to receive SSB, but it was all earned prior to starting Social Secuity Benefits. There is supposed to be a first-year rule but clearly TT does not know this. No where does TT never asks when you retired or started receiving SSB, so how does it know you received the wages prior to SSB?

Is there something I am forgetting to input on TT ?
It's really pissing me off.

Thanks for the help

Best answer by VolvoGirl

Deleted incorrect post.

Does not count for what? Your tax return only reports the taxable amount of SS depending on your total income for the year. Not for the first year working. Did you read this whole thread? We have tried to explain it.

Turbo Tax doesn't get involved with how much benefits you can get or how much income you can earn. That isn't part of your tax return. That is just with SS sending you the benefit checks. Your SS benefits can still be taxable.

There are 2 different things to know about social security. People get them mixed up all the time. Social Security is saying your SS checks may be REDUCED. Not if it's taxable or not.

1. Your actual SS checks

If you are over full retirement age your actual ss checks won't be reduced. Otherwise they will actually reduce your payments if you make too much other income in the prior year. See SS FAQ for working after retirement

https://www.ssa.gov/benefits/retirement/planner/whileworking.html

First year special rule
https://faq.ssa.gov/en-US/Topic/article/KA-01927?msclkid=11bc282ccf2211ecb65078152b05ae6b

See page 5 for the special first year rule
https://www.ssa.gov/pubs/EN-05-10069.pdf

2. Income Tax (even the first year).

For any age up to 85% of Social Security becomes taxable when ALL your other income plus 1/2 your social security reaches:

Married Filing Jointly: $32,000

Single or head of household: $25,000

Married Filing Separately: 0

xmasbaby0

Employee

People get really confused when they start getting SS. If you are not full retirement age, SS can reduce your benefits if you earn over a certain amount. But they do not do that during the FIRST year that you transition from working to getting SS. After that, if you are not full retirement age, they can reduce your benefit if you continue to work and earn over the limit.

None of that means that your SS is not taxable during the first year. It is. If you receive other income while receiving SS, your SS can be taxable. If you were expecting SS to be "tax free" the first year, you were mistaken about how it works.

Up to 85% of your Social Security benefits can be taxable on your federal tax return. There is no age limit for having to pay taxes on Social Security benefits if you have other sources of income along with the SS benefits. When you have other income such as earnings from continuing to work, investment income, pensions, etc. up to 85% of your SS can be taxable.

What confuses people about this is that before you reach full retirement age, if you continue working while drawing SS, your benefits can be reduced if you earn over a certain limit. (For 2019 it was $17,640— for 2020 it was $18,240; for 2021 it was $18,960. For 2022 it was $19,560 — for 2023 $21,240) For 2024, $22,320.

After full retirement age, no matter how much you continue to earn, your benefits are not reduced by your earnings; your employer will still have to withhold for Social Security and Medicare. If you work as an independent contractor then you will pay self-employment tax for Social Security and Medicare.

To see how much of your Social Security was taxable, look at lines 6a and 6b of your 2023 Form 1040

https://ttlc.intuit.com/questions/1899144-is-my-social-security-income-taxable

https://www.irs.gov/help/ita/are-my-social-security-or-railroad-retirement-tier-i-benefits-taxable

You need to file a federal return if half your Social Security plus your other income is $25,000 when filing single or head of household, or $32,000 when filing married filing jointly, $0 if you are filing married filing separately.

Some additional information: There are 11 states that tax Social Security—Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont These states offer varying degrees of income exemptions, but two mirror the federal tax schedule: MN and VT.

The tax laws for 2024 will change——for tax year 2024 Missouri and Nebraska will no longer tax SS

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

ldruth61Author

I know SS is taxed if I have income after I start SS. I said my income was prior to starting SS. So, it should not be counted on first year. And as i said, on TT there is no where to indict that wages are received prior to SS, so how the hell do they even know when the wages are earned or that is is my first year?

Where on TT does it gather this information

xmasbaby0

Employee

Not sure what you have in mind when you are saying your SS should not be counted. That is where you are confused. Yes.....it is taxable income. It counts. Your benefits are just not going to be reduced for that year by SS by the other income you earned. TT is not messing it up.

Len62

What I think I'm going to do is to put $0 for taxable social security in line 6a instead of the amount listed on the 1099. Then I'll simply document the months I made the other income to show that I didn't exceed the special monthly limit for those months I started getting SS, in case of audit. I'm still looking for an IRS form that is used to document this special rule situation.