Early Social Security-penalties.?

Question

Would a married person who is receiving $42000.00 in combined pension and early social security (age 62)-and who has $12,000 in annual medical insurance fees-be taxed at the 85% level on any earnings over the $44,000.00 limit for those taking early Social Security. Or would the $12,000.00 Health insurance premiums be deducted from the $42,000.00 income giving a person the ability to earn 14,000.00 per year prior to the 85% tax rate which I understand is after the earning of about 44,000 currently? This is hard to write so it is clear. Thanks for reading it anyway.

Answer 1

Determining the taxable portion of your social security takes place before any deduction are figured in, not after the fact

See Publication 915
How much is taxable
http://www.irs.gov/publications/p915/ar02.html#d0e792


http://www.irs.gov/publications/p915/index.html

Answer 2

The tax on your Social Security benefits does not depend on age. It is the amount of your benefit that has been decreased since you received Social Security at age 62 rather than your full retirement age.

If your pension income plus one-half of your Social Security is more than $44,000, you will pay income tax on 85% of your Social Security benefits.

You did not provide the amount of your Social Security, but let's assume it is $16,000 and you receive $26,000 in pension. Then the formula gives

26,000 + 1/2(16,000) = $34,000

and you are going to be taxed on a fraction of your social security which is far less than 85%. In fact, it is just about 25%. You can find a worksheet to figure the amount of taxable SS benefits in IRS Pub 17.

In the example, your AGI is still $42,000 and you will be able to deduct medical expenses in excess of $3,150 if you itemize.

Answer 3

The portion of social security that's taxed is calculated BEFORE taking off your standard or itemized deductions. Health insurance is an itemized deduction, so would not help to get less of your social security income taxed. Sorry.

Answer 4

You seem to be asking what the effect of you health insurance fees would be on the amount of your SS benefit. If that is the case I have no idea. If you are concerned about the taxable portion of your SS you would need to provide the SS amount and the other income amount to determine the taxable portion of the SS benefit.