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Opinion: Social Security Matters

by | Sep 25, 2019 | Opinion

Dear Rusty: Since it looks like a good option for me to retire at 62 and my husband (who is younger than me) to retire at 67, will the income he makes after I retire affect my benefit amount by way of income taxes if we continue to file jointly? Also, how would receiving an inheritance affect my benefit amount if I file at 62? Signed: Worried Spouse

Dear Worried: Your husband’s income won’t directly affect your monthly Social Security benefit payments at all, but it may affect the tax liability on your Social Security benefits. Only earnings from you working will affect your monthly Social Security benefits, but whether the benefits you receive become taxable income to the IRS depends upon the level of your “combined income” for your IRS filing status. “Combined income” is your Adjusted Gross Income (AGI) as reported to the IRS, plus any non-taxable interest you may have, plus 50% of your yearly Social Security benefits. This is also known as your “modified adjusted gross income” or “MAGI.”

If you file your income taxes as “married – filing jointly,” and your combined income for both you and your husband is more than $32,000, then up to 50% of your Social Security benefits will become taxable income. If your MAGI is over $44,000 then up to 85% of your Social Security benefits will become taxable. What that means in tax dollars depends upon your normal income tax rate as defined by the IRS. For information, the MAGI clip levels are lower when filing as an individual – if filing “single” MAGI over $25,000 means that up to 50% of Social Security benefits are taxable and MAGI over $34,000 means that up to 85% of Social Security benefits are taxable. But the advantages of filing jointly versus filing single usually more than offset the difference (though you may want to consult a tax advisor to confirm that). 

As to your last question, an inheritance won’t affect your monthly Social Security benefit (only your earnings from working will affect your Social Security benefit), but if that inheritance is taxable by the IRS, then the portion of your Social Security benefits which are taxable could be affected, as described above.

This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social

Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website or email us.

For more like this, see the Sept. 25 issue or subscribe online.

By Russell Gloor, AMAC Certified Social Security Advisor

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