How To Get A New Social Security Card
If you lose your Social Security card, you dont need a replacement in most cases. Just knowing your number is enough, SSA says.
If you do need a replacement, you can apply online with a free my Social Security account or in-person. If you cant use your account to request a replacement card, you can still start the process and complete it at a local Social Security office, typically more quickly, SSA says. In that case, though, youll need to provide required documents, such as a birth certificate, drivers license and passport.
8 things to know: What you should learn about your benefits
Withdraw Taxable Income Before Retirement
Another way to minimize your taxable income when drawing Social Security is to maximize, or at least increase, your taxable income in the years before you begin to receive benefits.
You could be in your peak earning years between ages 59½ and retirement age. Take a chunk of money out of your retirement account and pay the taxes on it. Then, you can use it later without pushing up your taxable income.
This means you could withdraw funds a little earlyor take distributions, in tax jargonfrom your tax-sheltered retirement accounts, such as IRAs and 401s. You can make penalty-free distributions after age 59½. This means you avoid being dinged for making these withdrawals too early, but you must still pay income tax on the amount you withdraw.
Since the withdrawals are taxable , they must be planned carefully with an eye on the other taxes you will pay that year. The goal is to pay less tax by making more withdrawals during this preSocial Security period than you would after you begin to draw benefits. That requires considering the total tax bite from withdrawals, Social Security benefits, and other sources. Be mindful, too, that at age 72, youre required to take RMDs from these accounts, so you need to plan for those mandatory withdrawals.
Taxing Social Security Benefits Is Sound Policy
Social Security beneficiaries with higher incomes pay income tax on part of their benefits. Those with incomes below $25,000 pay no tax on benefits, while those with the highest incomes pay tax on as much as 85 percent of their benefits. This arrangement is sound for several reasons:
- The substantial proceeds from taxing Social Security benefits are credited to the Social Security and Medicare trust funds, strengthening the programs financing.
- The taxation of benefits is broadly progressive, since people with low incomes pay nothing and the tax rate on benefits increases with income.
- As an earned benefit, Social Security should be subject to tax, like other earned benefits, such as employer pensions.
- Social Securitys tax treatment is more favorable than that of private defined-benefit pensions, primarily because of the protections for low-income beneficiaries.
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To Find Out If Their Benefits Are Taxable Taxpayers Should:
- Take one half of the Social Security money they collected during the year and add it to their other income.
Other income includes pensions, wages, interest, dividends and capital gains.
- If they are single and that total comes to more than $25,000, then part of their Social Security benefits may be taxable.
- If they are married filing jointly, they should take half of their Social Security, plus half of their spouse’s Social Security, and add that to all their combined income. If that total is more than $32,000, then part of their Social Security may be taxable.
Will You Be Taxed On Your Social Security Benefit
The next question that typically comes to mind when you tell current or future retirees that Social Security benefits are taxable is, Will my benefits be taxed? Right now, the answer is pretty much 50-50 between yes and no, although the pendulum continues to swing more toward seniors being taxed than not being tax on their Social Security income.
In 1984, when the taxation of benefits was implemented, persons and couples filing jointly whose modified adjusted gross income plus one-half of benefits exceeded $25,000 and $32,000, respectively, were subject to the tax. In this instance, the tax meant that up to half of their Social Security benefits could face federal ordinary income tax rates.
Then, in 1993, a second tier of taxation was introduced under the Clinton administration. Using the same formula as above i.e., MAGI plus one-half of benefits single filers and couples filing jointly with more than $34,000 and $44,000, respectively, will be subjected to this second tier. This new tier allows up to 85% of Social Security benefits to be taxed at the federal ordinary income tax rate.
Now, heres the catch: These income thresholds have never been adjusted for inflation. The fact that these thresholds havent budged for 35-plus and 25-plus years, respectively, is a big reason why more and more seniors are being subjected to this tax, and why you currently are, or may be in the future, paying back some of your benefits to the Social Security Administration.
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Watch For These 5 Changes To Social Security In 2023
More than 70 million people depend on one of Social Securitys benefit programs, so annual changes to the program and its payouts are always highly anticipated. But substantially higher benefit checks have been a rarity in recent years. With inflation soaring in 2022, the extra money will help seniors and others make ends meet.
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What Is Social Security Disability Insurance
Social Security Disability Insurance is a social insurance program funded by payroll taxes meant to help you if you become disabled. The program’s administrator, the Social Security Administration , generally allows you to earn coverage benefits if you meet their definition of disabled and are unable to work for a year or more.
The Social Security Disability Insurance program provides modest though vital benefits to you if you have suffered a serious and long-lasting medical condition that meets Social Security’s strict definition of disability. As a result, you can receive benefits if you meet the eligibility requirements.
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Calculator: How Much Of My Social Security Benefits Is Taxable
Social Security benefits are 100% tax-free when your income is low. As your total income goes up, youll pay federal income tax on a portion of the benefits while the rest of your Social Security benefits remain tax-free. This taxable portion goes up as your income rises, but it will never exceed 85%. Even if your annual income is $1 million, at least 15% of your Social Security benefits will stay tax-free.
How To File Social Security Income On Your Federal Taxes
Once you calculate the amount of your taxable Social Security income, you will need to enter that amount on your income tax form. Luckily, this part is easy. First, find the total amount of your benefits. This will be in box 3 of your Form SSA-1099. Then, on Form 1040, you will write the total amount of your Social Security benefits on line 5a and the taxable amount on line 5b.
Note that if you are filing or amending a tax return for the 2017 tax year or earlier, you will need to file with either Form 1040-A or 1040. The 2017 1040-EZ did not allow you to report Social Security income.
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How Much Social Security Will I Get
SSA calculates your benefit based on the monthly average of up to 35 of your highest earning years rather than, say, your last five years. The earnings are indexed to the change in overall wage levels and the rise in the nation’s standard of living while you were employed. Your future benefits thus will reflect that rise.
A Social Security calculator can help you figure out your benefits.
When checking whether your earnings record is correct or not, keep in mind theres no statute of limitations on correcting errors related to wages, according to Kurt Czarnowski, a principal at Czarnowski Consulting.
A person needs to provide proof of what the correct amount of earnings was, Czarnowski said at a recent National Association of Personal Financial Advisors conference. But even if it’s something back in 1976, if happen to have W-2, can make that correction.
Also, be aware that someone who chooses to draw benefits at the earliest possible age 62 would see their payment reduced by as much as 30%. By contrast, workers who delay retirement past their full-retirement age 66 or 67 for most people would see an 8% increase in benefits for each year they wait until 70.
States That Tax Social Security Benefits
You may have dreamed of a tax-free retirement, but if you live in one of these states, your Social Security benefits may be subject to state taxes.
Are Social Security benefits taxable? You can bet your bottom dollar they are at least by the federal government, which taxes up to 85% of your benefits, depending on your income. But what about state taxes on Social Security? Unfortunately, a dozen states can tack on additional taxes of their own.
States have different ways of taxing Social Security, too. It can be age-based, such as in Colorado where people under 65 may owe taxes on Social Security benefits but older people generally don’t. But other states tax Social Security benefits only if income exceeds a specified threshold amount. For example, Missouri taxes Social Security benefits only if your income tops $85,000, or $100,000 for married couples. Then there’s Utah, which includes Social Security benefits in taxable income, but allows a tax credit for a portion of the benefits subject to tax. Other states have different methods of taxing your Social Security check.
The state-by-state guide to taxes on retirees is updated annually based on information from state tax departments, the Tax Foundation, and the U.S. Census Bureau. Income tax rates and related thresholds are for the 2022 tax year unless otherwise noted.
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State Taxes On Disability Benefits
Most states do not tax Social Security benefits, including those for disability. As of 2020, however, a total of 13 states tax benefits to some degree. Those states are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont, and West Virginia. Most of these states set similar income criteria to the ones used by the IRS to determine how much, if any, of your disability benefits are taxable.
For Some Seniors The 2023 Cola Still Might Be Enough
The 2023 COLA will give seniors an average added benefit of $144 for individuals and $240 for couples filing jointly. Even though thats the highest increase in more than four decades, some senior advocates say it might not be enough for beneficiaries already struggling to keep up with inflation.
For example, the latest Consumer Price Index data shows that food prices have risen 11.4% over the previous year. Gasoline prices are up 18.2% over the same period, heating oil is up 58.1%, natural gas has risen 33.1% and electricity is up 15.5%. Given these increases, a COLA of 8.7% still lags well behind. The wild card is when prices will finally start coming down.
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What Is Social Security
Social Security is the most successful anti-poverty program in our countrys history, according to the SSA. President Franklin D. Roosevelt signed the Social Security Act into law in 1935 as a retirement program for workers. It was part of the historic New Deal, and the first lump-sum payments were made in 1937.
Payments for workers survivors were added by Congress in 1939 and regular monthly checks started in 1940. Disability benefits were added in 1956.
Todays workers pay Social Security taxes into the program, and the money is disbursed as monthly income to beneficiaries in a pay-as-you-go system, according to the National Academy of Social Insurance.
One in five Americans receives benefits, including more than 47 million retired workers and dependents, 10 million disabled workers and dependents, and 6 million survivors of deceased workers.
Social Security Benefit Changes Coming In 2023 Will Help Retirees
President Joe Biden speaks about his administrations plans to lower prescription drug costs and protect Social Security and Medicare, Saturday, Nov. 5, 2022, at Jones Elementary School in Joliet, Ill.
Inflation has been sky-high over the last year, so its a good thing that the Social Security Administration is boosting its cost of living adjustment for benefit checks in 2023. Its just one of many changes announced by Social Security recently.
Here are some key changes to Social Security that are happening next year:
Cost of living adjustment rises. The Social Security Administration has announced that benefit checks will rise 8.7 percent in 2023. The 8.7 percent adjustment will amount to a $146 increase in monthly benefits for the average retired worker on Social Security, beginning in January. Specifically, the average check for retired workers will increase from $1,681 to $1,827.
Maximum taxable earnings going up. In 2022, the maximum earnings subject to Social Security taxes was $147,000. In 2023, the maximum earnings will increase to $160,200, meaning more of a workers income will be subject to the tax.
Maximum Social Security benefit also set to increase. The maximum Social Security benefit for a worker retiring at full retirement age will also increase in 2023, from $3,345 to $3,627. This maximum applies to those retiring at the full retirement age, which is 67 for anyone born after 1960.
Of course, those are averages, and individual circumstances will vary.
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Whos Eligible For Social Security Disability Insurance
In addition to meeting the disability requirements, you must have worked long enough and recently enough to qualify for Social Security Disability Insurance.
First, you must meet the work test. This test is based on Social Security work credits and requires you to earn at least a minimum amount of income in wages or self-employment income per calendar year. For each $1,470 in wages or self-employment income that you earn per year you earn one credit. You can earn up to four credit per year. When youve earned $5,880 in 2021, youve earned your four credit for 2021.
Typically, you need at least 40 credits with 20 of these earned in the last 10 year period ending with the year of your disability. However, meeting the work test requirement can also depend on your age. It requires different amounts of Social Security credits since younger workers typically have not had enough time in the workforce to earn the full 40 credits. For those:
- Under age 24: You meet the work test if you earned 6 credits in the 3-year period when your disability began.
- Age 24 to 31: In general, you may qualify if you have credits equivalent to working half the time between age 21 and becoming disabled.
- Age 31 or older: Youll need to have earned at least 20 credits in the 10-year period immediately before becoming disabled.
Second, review the Social Security Administrations table to determine if you meet the duration of work test based on your age and when your disability began.
The Biggest Changes Are Yet To Come
While these are three significant changes to Social Security that will impact Americans who aren’t retired yet, the biggest changes are yet to come. Social Security will become insolvent by 2035 if nothing is done. This would mean a reduction in benefits of around 24%.
It’s a pretty good bet, though, that politicians in Washington will bolster the program to preserve benefits. However, the changes that they make to accomplish this will likely affect millions of Americans in ways yet to be determined.
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How To Balance Your New Cola Benefit With Other Income Sources
Many Social Security recipients need the 8.7% COLA just to pay the bills, while others with more wealth built up can simply put it toward savings or discretionary spending. In either case, its important to balance your new COLA benefit with other income sources, experts say.
Regardless of the size of your Social Security increase in 2023, the monthly payment is not intended to be the sole source of income in retirement. It should be complemented with other sources such as retirement accounts, regular savings accounts and other investments. Aim for a mix of income sources, and if you are still investing keep your portfolio balanced between stocks, bonds and funds so that all your eggs are not in one basket.
If you want to develop new income streams to add to your Social Security payment, there are quite a few options. These include not only investing, but also finding side gigs that can bring in more money.
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Why Did I Get Two Social Security Checks This Month
If youre owed back payments, you could get two checks, according to GOBankingRates, a personal finance website. Also, if you receive either retirement or disability benefits, as well as Supplemental Security Income, or SSI, because your income is below certain thresholds, you also could receive two payments.
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