Is my pension considered a seperate item of income that cannot be used to determine additonal taxes on S.S.?

Question

the IRS in Texas- a community property state.it appears they are applying their guidelines for marital property by insisting that my pension be calculated with my husbands social security,His own pension and wages to determine if HIS social security benefits are further taxable.According to publication 555,pages 2,3,4 benefits are taxable to the person whose NAME it is or OWNED by. I take this to mean;HIS social security benefits,His wages and HisPension determines whether His social security benefits are further taxable. I don't receive social security. I receive a Pension in my NAME which is taxable to me and is not community property for tax purposes just because we share [the same reporting line] on form 1040,16b, and because of where we are domiciled.Being married and filing a joint return in the state of Illinois{non-community proprty state][ permits me to make this adjustment because the social security is not taxable to me. only if spouses totaled income exceeds the limit ..?

Back with good news for me but bad for all of us. ..Just to let you know, found a tax article and got out my copy of the U.S. constitution. to confirm what i thought i had read..... I DID!
typed in: www.agenturus.org/IRSFraud.htm

after studying this article ,especially pg#27 SUBTITLE C, employment taxes,,,,where within hides subtitle A for which the IRS was trying to collect from us on...? Didn't apply to us.! My worst suspicions were confirmed. Many of us are being lied to. I did locate under the (codes of federal registry the information i was looking for and complained to our congressman. Now I am wondering if the IRS is being used as a possible "vehicle" by which to fund the war. PLEASE read this article, "So ,you want to know the truth about America's tax laws and tax system "

Thanks again to all of you for your help but now we all are going to have to figure out what to do with this IRS mess

Answer 1

Yes your Pension or other taxable income is used in computing what if any portion of His Social Security benefits are taxable, up to 85% of his SSB can be taxable depending on the TOTAL household income per the worksheet in PUB 915
This is the rules for couples who file Married Filing Jointly.

add one–half of the total social security you received to all your other income, including any tax exempt interest and other exclusions from income;


Then, compare this total to the base amount for your filing status
The 2006 base amounts are:

$32,000 for married couples filing jointly

See IRS Publication 915
http://www.irs.gov/publications/p915/index.html

Answer 2

Skyy, the answer hasn't changed from when you asked this same question a few days ago. You said then you couldn't get a straight answer from the IRS - it sounded like you got a straight answer, you just didn't like the answer you got.

If you want the advantages of filing a joint return, then all of the income that either of you has is counted on the joint return, including in the calculation of how much of social security is taxed. It doesn't matter WHOSE income or social security it is, between the two of you. It's all tossed into one pot for tax purposes - that's what a joint return is and does.

You have the option each filing as married filing separately. Then your income would not be included in the calculation. Be aware though that there's a different calculation on taxable amount of ss for people filing as married filing separately, so be sure doing it that way is to your advantage. And this only works for future years. Once the filing deadline is passed, you can't amend a joint return to filing separately.

The above is how the laws are written. If you don't like them, you can call your congress person and ask them to introduce a bill to change them, but unless and until a change is passed, those are the rules that stand.

Answer 3

Unfortunately you're misreading things. There are two ways you can file, Married Filing Separately and Married Filing Jointly. How you file will impact the taxable amount determination on your returns.

If you file a joint return, take one half of your combined Social Security (I realize you're not collecting SS yet, so it will just be his SS) and add to that ALL other income that the both of you receive. That INCLUDES your other pension income as well as any wages, dividends and interest, rents, etc. If that number exceeds $32,000, up to 85% of all SS that you are receiving is taxable. When you file a joint return, ALL income from both spouses is reported on the return and is also used in calculating how much of your SS is taxable. Being in a CP state like TX has nothing to do with it at all.

Although you could file a separate return, that would increase your taxes substantially. That is because when your husband added one half of his SS to all of his other income (or his share of CP income) the "magic" number for determining the taxable portion of his SS is $0! That's right, if you file separate returns you can't exclude any SS income from potential taxation. Yes, it sucks, but that's the law so don't blame the IRS.

There is one other way but it's drastic and might not help you much until YOU start collecting SS. You could get a divorce. Then you would each file your own returns as Single and list only your own income on your individual returns. The "magic" number for a single taxpayer in determining the taxable portion of SS income is $25,000 so 2 single taxpayers living together effectively would effectively use $50,000 as their "magic" number.

I know 2 couples who have done this and saved a fair chunk of change on their taxes. Obviously there are other legal issues to consider here and of course you have your own personal moral compass that may render this choice a non-starter. But it IS an option and it IS perfectly legal as long as you don't do the "December Divorce, January Marriage" bit. That IS illegal.

Welcome to the Marriage Penalty, Part Deux. Our government makes a big deal about "family values" but then turns around and makes it more advantageous to "live in sin." Go figure!

Answer 4

I answered this earlier

http://answers.yahoo.com/question/index;_ylt=Au0SfRQ0aF4zzlWwAAPgPT3ty6IX?qid=20070703210607AA5cMqH&show=7#profile-info-5071749ea4e037930baa0c50e3d4ad74aa

I would like to add that your spouse can pay the taxes he owes on his Social Security benefits by filling out Form W4-V. He can have a flat percentage withheld, so you can think of the income tax on SS as a reduction in benefits due to the fact that you have other income.

Link to Form W4-V

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

Answer 5

Judy's answer was spot on. If you have more questions I would go to IRS web site and look at PUB 17 under who should file that is a very good start. Or try your local HR Block they can look at everything for you and tell you.