Social Security may be your largest or one of your largest assets. How you manage it, by deciding which benefits to collect and when, can make an absolutely huge difference to your lifetime benefits. And those with the highest past covered earnings have the most to gain from maximizing their Social Security. Show
I've been answering questions and writing columns about Social Security each week for the past two years on PBS NEWSHOUR's website. The editors at Forbes asked me to post a Q&A each day from those columns. To see all my columns, please go to my software company's site, www.maximizemysocialsecurity.com, and click More Press below the WSJ quote. Today’s question asks if it’s ever possible to not have to pay Social Security, especially on income earned at 78. The answer outlines the requirements for paying Social Security taxes on covered earnings and brings up the effects of the current and future earnings on the retirement benefit amount. Question: At what age can you stop paying Social Security tax if you continue to work? I am 78 and still work. Answer: You must pay pay Social Security FICA taxes on your earnings, no matter how old you are. But if you are earning enough and certainly if you are earning above Social Security’s taxable covered earnings ceiling ($113,700 this year), your benefits will increase each year by more than Social Security’s inflation adjustment factor. Social Security, the program that provides retirement, disability, and survivor benefits to almost one-in-five people in the US, stops getting support from America’s wealthiest today. Thursday the 24th is the first day of 2022 that millionaires make no contribution to the program. Most people are not aware that Social Security contributions are capped at the first $147,000 of wage income. That means that someone who earns $1,000,000 per year stops paying into the program less than two months into the year. Because so little of their income is subject to the tax, a millionaire’s effective tax rate is less than 1 percent. Compare that to the 6.2 percent that any worker making less than $147,000 pays, and it is clear that the burden of paying for Social Security rests on those who make the least. Most people are aware, however, that the Social Security Trust fund is projected to have a shortfall in the future. Many factors contribute to the shortfall, but a sizeable part of it is increasing income inequality. When the payroll tax cap was codified in 1989, only 10 percent of wage income was excluded. However, more than 18 percent of wage income is projected to be over the tax cap in the next 10 years. Scrapping the payroll tax cap to make every earner pay the same tax rate, along with modest changes to the program, could eliminate the shortfall and allow for crucial expansions to benefits. Our calculator below lets you see for yourself when people with various wage incomes stop paying into Social Security. Some salaries of note to enter into the calculator:
Support CeprApoyar a CEPRIf you value CEPR's work, support us by making a financial contribution.Si valora el trabajo de CEPR, apóyenos haciendo una contribución financiera.Donate Apóyanos  Yes. There is no exemption for paying the Federal Insurance Contribution Act (FICA) payroll taxes that fund the Social Security and Medicare systems. As long as you work in a job that is covered by Social Security, FICA taxes will be withheld from your paycheck. The same goes if you remain actively self-employed. If your annual net profit from your business is more than $400, you have to pay your share of Social Security and Medicare — as both employer and employee — via the Self-Employed Contributions Act (SECA) taxes you pay with your federal tax return. Keep in mindYour work income could lower your benefit if you claimed Social Security before reaching full retirement age (66 and 4 months for people born in 1956 and gradually rising to 67 for those born in 1960 or later). That’s because early filers are subject to Social Security earnings limits, which trigger withholding from benefits if your income exceeds an annual cap (in 2022, it’s $19,560). Top
Updated for Tax Year 2022 • October 18, 2022 11:08 AM OVERVIEW The IRS typically requires you to file a tax return when your gross income exceeds the standard deduction for your filing status. These filing rules still apply to senior citizens who are living on Social Security benefits. However, if Social Security is your sole source of income, then you don't need to file a tax return. Key Takeaways • If the only income you receive is your Social Security benefits, then you typically don't have to file a federal income tax return. • If you are at least 65, unmarried, and receive $14,700 or more in non-exempt income in addition to your Social Security benefits, you typically must file a federal income tax return (tax year 2022). • If you are 65, married, and file a joint return with
a spouse who is also 65 or older, you typically must file a return if your non-exempt income is $28,700 or more (or $27,300 if your spouse is under 65 years old). • If the sum of half your Social Security plus your adjusted gross income plus your tax-exempt interest and dividends exceeds $25,000 for single filers (or $32,000 if you are married filing jointly), then a portion of your Social Security benefits are included in gross income and you might need to file a tax return. When seniors must fileFor tax year 2022, unmarried seniors will typically need to file a return if:
However, if your only income is from Social Security benefits, you don't typically include these benefits in your gross income. If this is the only income you receive, then your gross income for taxes equals zero, and you typically don't have to file a federal income tax return. But if you do earn other income including certain tax-exempt income, then each year you must determine whether the total exceeds the filing threshold.
For the 2022 tax year,
TurboTax Tip: As long as you are at least 65 years old and your income from sources other than Social Security is not high, then the tax credit for the elderly or disabled can reduce your tax bill on a dollar-for-dollar basis. When to include Social Security in gross incomeThere are certain situations when seniors must include some of their Social Security benefits in gross income. If you are married but file a separate tax return and live with your spouse at any time during the year, then 85% your Social Security benefits are considered gross income which may require you to file a tax return. In addition, a portion of your Social Security benefits are included in gross income, regardless of your filing status, in any year the sum of half your Social Security benefit plus all of your adjusted gross income, plus all of your tax-exempt interest and dividends, exceeds $25,000, or $32,000 if you are married filing jointly. Tax credit for seniorsEven if you must file a tax return, there are ways you can reduce the amount of tax you have to pay on your taxable income. As long as you are at least 65 years old and your income from sources other than Social Security is not high, then the tax credit for the elderly or disabled can reduce your tax bill on a dollar-for-dollar basis. Remember, with TurboTax, we'll ask you simple questions about your life and help you fill out all the right tax forms. With TurboTax you can be confident your taxes are done right, from simple to complex tax returns, no matter what your situation. All you need to know is yourselfAnswer simple questions about your life and TurboTax Free Edition will take care of the rest. For simple tax returns only Real tax experts on demand with TurboTax Live BasicGet unlimited advice and an expert final review. Done right, guaranteed. For simple tax returns only
The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business. At what age is Social Security no longer taxed?Are Social Security benefits taxable regardless of age? Yes. The rules for taxing benefits do not change as a person gets older. Whether or not your Social Security payments are taxed is determined by your income level — specifically, what the Internal Revenue Service calls your “provisional income.”
Do I have to pay Social Security tax after age 70?As long as you have earned income (such as wages), you're required to pay Social Security taxes on up to the annual payroll limitation—$147,000 in 2022. So, yes, if you continue to work, you'll continue to pay into Social Security and other payroll taxes.
Do you still pay Social Security after retirement?As long as you continue to work, even if you are receiving benefits, you will continue to pay Social Security taxes on your earnings.
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At what age do you stop paying social security
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