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Still Working? Don`t Let Uncle Sam Get More Than You Do! You're retired and you'd like to supplement your Social Security and pension income. Does it pay to work? For Uncle Sam it does-he may get more than you do. Elected officials have figured out how to relieve working retirees of their added income three different ways: First, by reduction of benefits. Until you reach age 65, Social Security will subtract money from your retirement check if you exceed certain earnings limits. If you are 62 through 64 one dollar is deducted for every two dollars earned over the exempt amount of $10,080 ($840 monthly). Second, added income may make your Social Security benefits taxable by boosting your income over another set of limits. You must pay tax on 50 percent of your Social Security benefits if your income goes above $25,000 if single, $32,000 if married and file a joint return. When your income exceeds $34,000 if single or $44,000 if married up to 85 percent of your benefits are subject to tax. This penalty applies at any age-even after you reach age 65. Third, taxation of income. No matter what your age, you pay income tax and Social Security (FICA) tax on your added income. Source: "Retirement Earnings Test Exempt Amounts," Social Security Administration, October 19, 1999. J.K. Lasser's Your Income Tax 2000, Macmillan General Reference, New York, NY 10019-6785. This article first appeared in Volume 5, Issue 4 of "The Social Security and Medicare Advisor" newsletter (March/2000). To receive future editions of "The Advisor" in its special, free e-mail version, please click here. | ||||||||
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