How will you cope with income tax on your social security tier of FERS?

[Frixxxx]

...The key is limiting your income.

But If I have more to spend then I'm an economic stimulator. I invest max in all tax-deferred accounts. I write of 10% (of income)medical expense. Mortgage interest and charitable contributions. Guess what.....I still can't get below the ceiling of maximum income to have to pay 85% tax on her SS.

I'm AT my limit!!!

 

[roskopfm]

The only way to limit this is to offset the income. If your still working, with hold more in your TSP/401K. If you buy rental property, you can deduct the deprecation so generally you would lose money for tax purposes on a rental (not in real life) and wont generally be in a positive situation until fully depreciated or you sell it. Otherwise, if you have cash in CD's invest in cash equilivant mutual funds, thus no income until you withdraw from the funds. The key is limiting your income.

 

[Frixxxx]

Another member asked me about the potential for paying income taxes on up to 85% of our SS income. Anyone have plans on how they will deal with this?

Well, I will get nailed to the cross this year because my wife is disabled and recieves SS. It will be taxed at 85% because of my income. The only way out is to divorce her and move her to a nice studio apartment. Then it can't be taxed....what the hell is wrong with this picture?

 

[offtrack]

Another member asked me about the potential for paying income taxes on up to 85% of our SS income. Anyone have plans on how they will deal with this?





Are Your Social Security Benefits Taxable?

IRS TAX TIP 2008-31
How much, if any, of your social security benefits are taxable depends on your total income and marital status. Generally, if social security benefits were your only income, your benefits are not taxable.
Taxpayers who receive little or no income in addition to their Social Security Benefits would typically not need to file a tax return. However, you must file a 2007 tax return to receive an economic stimulus payment from the federal government.
If you received income from other sources, your benefits will not be taxed unless your modified adjusted gross income is more than the base amount for your filing status. Your taxable benefits and modified adjusted gross income are figured in a worksheet in the Form 1040A or Form 1040 Instruction booklet.

Before you go to the instruction book, do the following quick computation to determine whether some of your benefits may be taxable:

• First, 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. If the total is more than your base amount, some of your benefits may be taxable.

The 2007 base amounts are:

• $32,000 for married couples filing jointly
• $25,000 for single, head of household, qualifying widow/widower with a dependent child, or married individuals filing separately who did not live with their spouses at any time during the year

http://www.irs.gov/newsroom/article/0,,id=179091,00.html