should my spouses wages, pension, and social security be calculated first ?]?

Question

I retired after 30 years at one job. my pension is my only source of income{ not old enough for SS yet] IRS wrote stating that my pension is income for my husband when determining how much of his social security is taxable..? when he retired in 2005 the S.S. board calculated his wages+ pension for the year to detemine if additional taxes on S.S. benefit. I Don"t receive those benefits.... but they say the whole amount of $11,000 is to be added to my pension FIRST to find out how much of his benefits are taxable - if this method of accounting is used it immediately places us over the cap of 32,000 for married filing jointly .......? am I being taxed twice{my own distributions are taxable once distributed to me} I feel very violated and I don't know what form to use to do what they want. I earned my pension on my own merits not my husband's. This is all new to me and I cannot get straight answers from either IRS OR S.S who still say his benefits and wages are calculated FIRST .

Answer 1

I would suggest that if you can't understand the answers from IRS or SS talk to a professional estate planner, and/or a good CPA.

At our age (and I would almost bet I am close to your age) we need all the help we can get to make sure we have enough to keep us for the next 15 years or so.

While you are getting the answers to you question you will also be getting some first rate retirement advice, too.

Answer 2

Your pension is only taxed once. What is happening is that your pension is causing some of your spouse's Social Security to be taxed. It seems your spouse may have received inaccurate information regarding taxation of his benefit.

If you and your spouse do not live together, you can file married filing separately and probably come out better than if you file together. But if you live together, you probably will come out better if you file jointly, even though some of your spouse's Social Security is being taxed.

Your spouse can have withholding taken out of his benefit by filling out a Form W4-V. So the taxes due on his Social Security do not have to come out of your pension benefit.

Here is Form W-4V:

http://www.irs.gov/pub/irs-pdf/fw4v.pdf

Answer 3

If you're filing a joint return, all of the income of BOTH of you is added together to determine what portion of social security is taxable - on a joint return, it doesn't matter which of you actually made the income. You're not being taxed twice, but you might be liable for taxes on some of the social security income.

Neither income is really calculated FIRST, it's all calculated together.

Answer 4

Make out a tax return as MFJ, and then make out 2 returns as (each) MFS, and see which way is better. If you use tax software to prepare your return, it should be able to make this comparison for you.
There is a 99% probability that MFJ will save you money.

Answer 5

It seems like IRS penalizes people who are married, but I guess it is because two can live cheaper per capita than one. I just wish I had the kind of retirement you have.