Monthly Newsletter

Monthly Update:

2010-11 Newsletter – FAQs Regarding Your Social Security Statement

Q. Are my benefits figured on my last five years of earnings?
A. No. Retirement benefit calculations are based on your average earnings during a lifetime of work under the Social Security system. For most current and future retirees, we will average your 35 highest years of earnings. Years in which you have low earnings or no earnings may be counted to bring the total years of earnings up to 35.

Q. I stopped work at the end of last year at age 52. I don’t expect to work again before I start my Social Security benefits when I turn 62. Will I still get the same benefit amount the SSA shown for age 62 on the Social Security Statement that they recently sent me?
A. Probably not. When they averaged out your 35 highest years of earnings to estimate your benefits on your Statement, they assumed you would continue to work up to age 62, making the same earnings you made last year. If, instead, you have $0 earnings each year over the next 10 years, your average earnings will probably be less and so will your benefit. You can use our Retirement Calculator or Benefit Calculators on our Financial Tools page to see how this will affect your monthly benefit amount.

Q. Will my retirement pension from my job reduce the amount of my Social Security benefit?
A. If your pension is from work where you also paid Social Security taxes, it will not affect your Social Security benefit. However, pensions based on work that is not covered by Social Security (for example, the federal civil service and some state, local, or foreign government systems) probably will reduce the amount of your Social Security benefit. For more information, read the following fact sheets:

• “Windfall Elimination Provision” and
• “Government Pension Offset.”

Q. My wife and I both worked under Social Security. Her Social Security Statement says she can get $850 a month at full retirement age and mine says I would get $1450. Do we each get our own amount? Someone told me we could only get my amount, plus one-half of that amount for my wife.
A. Since your wife’s own benefit is more than one-half of your amount, you will each get your own benefit. If your wife’s own benefit were less than half of yours (that is, less than $725), she would receive her amount plus enough on your record to bring it up to the $725 amount.

Q. If I work after I start receiving Social Security retirement benefits, will I still need to pay Social Security and Medicare taxes on my earnings?
A. Yes. Any time you work in a job that is covered by Social Security–even if you are already receiving Social Security benefits–you and your employer must pay the Social Security and Medicare taxes on your earnings. The same is true if you are self-employed. You are still subject to the Social Security and Medicare taxes on your net profit.

Q. I have Medicare, but I didn’t apply for retirement benefits because I’m under full retirement age and still working. How do I decide when to start receiving retirement benefits?
A. Deciding when to start receiving benefits is an important decision that needs to be made carefully. You can:

• Read the SSA’s “Retirement Information For Medicare Beneficiaries” fact sheet,
• Call our office for personalized assistance on helping you decide when best to start receiving benefits,
• Use our Retirement Calculators on our Financial Tools page to see how different retirement dates will affect your benefit amount, and
• Find other information you can use to help you decide when to start your benefits in the SSA’s “Near Retirement” section of their website.

► Oct 2010 – Taxpayers Face Oct. 15 Deadlines; Due Dates for Extension Filers
► Sep 2010 – List of Tax Provisions Scheduled to Expire on December 31, 2010
► Aug 2010 – One-Time Special Filing Relief Program for Small Charities
► Jul 2010 – Amend a 2009 / File a 2010 Return for Homebuyer Credit
► Jun 2010 – IRS Offers Tax Tips for the 2010 Summer
► May 2010 – American Opportunity Credit Helps Pay for First Four Years of College
► Apr 2010 – Small Business Health Care Tax Credit: 15 FAQs
► Mar 2010 – The Making Work Pay Tax Credit
► Feb 2010 – 2009 Tax Law Changes Provide Saving Opportunities for Nearly Everyone
► Jan 2010 – New Mileage Rates and ROTH IRA Conversion Rules
► Dec 2009 – First-Time Homebuyer Credit Extended to 2010
► Nov 2009 – Tax Credits to Help Winterize Your Home
► Oct 2009 – Required Minimum Distribution Waiver
► Sep 2009 – IRS Builds New International Tax Group
► Aug 2009 – Car Allowance Rebate System (CARS) Act of 2009
► Jul 2009 – American Recovery and Reinvestment Act of 2009 (ARRA)
► Jun 2009 – The ‘What Ifs’ of an Economic Downturn
► May 2009 – Recovery Payments to Social Security and SSI Beneficiaries
► Apr 2009 – Tax Free Unemployment Benefits
► Mar 2009 – Law Offers Special Tax Breaks for Small Business
► Feb 2009 – 2008 Tax Change Highlights
► Jan 2009 – First-Time Homebuyers Tax Credit
► Dec 2008 – 2009 Standard Mileage Rates
► Nov 2008 – 2009 Inflation Adjustments Expand Benefits
► Oct 2008 – Wall Street Bailout, Explained
► Sep 2008 – IRS Alters Certain Extension Periods
► Aug 2008 – Scammers Use e-Mail, Fax to Pose as IRS
► Jul 2008 – Gas Prices Spark Standard Mileage Increase
► Jun 2008 – Fix for High Gas Prices?
► May 2008 – Fed Cuts Rates Again
► Apr 2008 – Facts About the 2008 Stimulus Payments
► Mar 2008 – Economic Stimulus
► Feb 2008 – Changes for Gifts, Estates, and Trusts
► Jan 2008 – 2007 Tax Change Highlights
► Dec 2007 – New 2008 Mileage Rates
► Nov 2007 – Roth IRA Conversions
► Oct 2007 – Home Foreclosure and Debt Cancellation
► Sep 2007 – Risks of Interest-Only Loans
► Aug 2007 – What to Know about 401(k)s
► Jul 2007 – Interest Rates for Q3 2007
► Jun 2007 – Guidance on Health Savings Accounts
► May 2007 – Taxes on College Savings Accounts
► Apr 2007 – New-Home Sales Fall
► Mar 2007 – Business Expenses
► Feb 2007 – CBO Predicts Smaller 2007 US Deficit
► Jan 2007 – IRS Begins Implementing Extenders Legislation
► Dec 2006 – 2007 Inflation Adjustments Widen Tax Brackets, Expand Tax Benefits
► Nov 2006 – A Tax Credit for Hybrid Auto Buyers
► Oct 2006 – A Reminder Regarding Capital Gains
► Sep 2006 – Summary of Pension Protection Act (PPA)
► Aug 2006 – Government to Stop Collecting Long-Distance Telephone Tax
► Jul 2006 – The “Invisible” Risks of Investing
► Jun 2006 – The Tax Increase Prevention and Reconciliation Act
► May 2006 – IRS Strengthens Withholding Compliance Programs
► Apr 2006 – Sale Of A New Home
► Mar 2006 – What Income is Taxable?
► Feb 2006 – Missing Your Form W-2?
► Jan 2006 – 2005 Tax Rate Schedules
► Dec 2005 – IRS Warns of e-Mail Scam about Tax Refunds
► Nov 2005 – Record Retention Guide
► Oct 2005 – Business Incentives Included in the 2005 Energy Act
► Sep 2005 – Interest Rates Rise 1 Percentage Point for Fourth Quarter 2005
► Aug 2005 – Are you moving this summer?
► Jul 2005 – Is Form 1040 Really
► Jun 2005 – How and Why I Hired My Tax Accountant
► May 2005 – Amended Returns
► Apr 2005 – Filing Extensions Available by Phone or Computer
► Mar 2005 – Tax Shelters
► Feb 2005 – 2004 Tax Changes
► Jan 2005 – IRS Begins 2005 Filing Season
► Dec 2004 – Recent Changes May Affect Your 2004 Taxes
► Nov 2004 – Social Security Announces 2.7 Percent Benefit Increase for 2005
► Oct 2004 – Sarbanes-Oxley compliance is lagging
► Sep 2004 – New tax law revises year-end tax strategies
► Aug 2004 – Refinancing a Home Mortgage?
► Jul 2004 – Making The Dividend Tax Cut Work
► Jun 2004 – How Long Should You Keep Your Records?
► May 2004 – Can You Deduct Home Office Expenses?