Maximizing your Social Security Benefits

by | Mar 28, 2016 | Retirement

Figuring out which Social Security benefits you are eligible for and the timing to apply is no simple task. It involves sifting through what seems to be countless rules which govern the programs payouts. While there is no one-size-fits-all rule, there are several strategies you can use to maximize your benefits depending on your filing status. According to the Social Security website:

If you and your current spouse are full retirement age, one of you can apply for retirement benefits now and have the payments suspended, while the other applies only for spouse’s benefits. This strategy allows both of you to delay receiving retirement benefits on your own records so you can get delayed retirement credits.

Note: If you want to do this, only one of you can apply for retirement benefits and have the payments suspended.

If you are already entitled to benefits, you may voluntarily suspend current or future retirement benefit payments up to age 70 beginning the month after the month when you made the request.

You do not have to sign your request to suspend benefit payments. You may ask orally or in writing.

If your benefit payments are suspended, they will start automatically the month you reach age 70.

If you change your mind and want the payments to start before age 70, notify the Social Security Administration when you want your benefits reinstated (orally or in writing). Your request may include benefits for any months when your payments were suspended.

 Note: If you started receiving Social Security benefits less than 12 months ago and you changed your mind about when they should start, you may be able to withdraw your Social Security claim and re-apply at a future date.

If your request is approved, you must repay all the benefits you and your family received based on your retirement application.

Before You Make Your Decision

There are some things you need to know about what will happen if you suspend your retirement benefits.

If you are enrolled in Medicare Part B (Supplementary Medical Insurance), you will be billed by the Centers for Medicare & Medicaid Services (CMS) for future Part B premiums.

These premiums cannot be deducted from your suspended retirement benefits. If you do not pay the premiums timely, you may lose your Part B Medicare coverage. (You will have the option of automatically paying the bill from an account at your bank or financial institution.)

Exception: If you also receive benefits as a spouse or ex-spouse, we can deduct your Part B premium from that benefit payment.

If you also receive Supplemental Security Income (SSI) benefits, suspending your retirement benefits will make you ineligible for SSI.

If you would like us to evaluate your retirement planning options or would like additional information about particular situations, please call one of our professionals today.

5 Things You Need to Know About Additional Medicare Tax

Some taxpayers may be required to pay an Additional Medicare Tax if their income exceeds certain limits. Here are some things that you should know about this tax:

  • Tax Rate -The Additional Medicare Tax rate is 0.9 percent.
  • Income Subject to Tax – The tax applies to the amount of certain income that is more than a threshold amount. The types of income include your Medicare wages, self-employment income and railroad retirement (RRTA) compensation.
  • Threshold Amount You base your threshold amount on your filing status. If you are married and file a joint return, you must combine your spouse’s wages, compensation or self-employment income with yours. Use the combined total to determine if your income exceeds your threshold.

Threshold amounts

Married filing jointly:                                       $250,000

Married filing separately:                                 $125,000

Single:                                                                 $200,000

Head of household:                                          $200,000

Qualifying widow(er) with dependent child:   $200,000

  • Withholding/Estimated Tax – Employers must withhold this tax from your wages or compensation when they pay you more than $200,000 in a calendar year. If you are self-employed you should include this tax when you figure your estimated tax liability.
  • Underpayment of Estimated Tax – If you had too little tax withheld, or did not pay enough estimated tax, you may owe an estimated tax penalty.

If you owe this tax, file Form 8959, with your tax return. You also report any Additional Medicare Tax withheld by your employer on Form 8959. The professionals in our office understand Medicare Tax, call us today.