Social Security Flashcards
What are the NIIT income thresholds?
- MFJ – $250,000
- MFS – $125,000
- Single – $200,000
Not indexed – thus, more taxpayers will be subject to the tax
over time
What is included in Net Investment Income? What is one thing that is not?
Net investment income includes portfolio income, income from
passive activities, gains on disposition of property, but does
not include distributions from qualified plans or IRAs.
HIGH INCOME MEDICARE TAX is how much %?
0.9%
High Income Medicare Tax Income Thresholds?
- MFJ - $250,000
- MFS - $125,000
- Single - $200,000
0.9% In Excess~! - This Medicare tax is paid by employees, not employers
- Applies to wages, compensation or self-employment
income - Not indexed – thus, more taxpayers will be subject to the
tax over time
How do you calculate Self Employment Tax?
A = 92.35% times SE income
* 12.4% times (A) up to
$147,000 (2022), plus
* 2.9% times (A)
How much is SSDI of FICA? as a %
6.2% - ER 6.2% - EE / both up to $160,200 for 2023
How much of FICA is Medicare?
1.45% - ER 1.45% - EE / there is no income limit/cap like SSDI
How much do self-employed individuals pay for SSDI? (as a %)
12.4% / This stops at $160,200 SS Wage Base for 2024. This is calculated on Self Employment Income after you multiply Gross SE Income by 92.35%. Notice the Wage Base is calculated AFTER the Net SE Income Calc.
How much do self-employed individuals pay for Medicare?
2.9% / There is no income wage base for Medicare. This is calculated on Self Employment Income after you multiply Gross SE Income by 92.35%
Currently Insured is defined as:
6 out of the last 13 quarters.
Calculating AIME is based on:
- Convert earnings after age 21 to current
dollars using an indexing factor (National Average Wage Indexing Series) - Sum the highest 35 years
- Divide sum by 420 months
Calculating PIA by: (Broadly know this)
- Sum of three separate percentages of the AIME
90% of the first $1,024 (different for 2024)
32% of the AIME over $1,024 and less than $6,172
15% of the AIME that exceeds $6,172 - Maximum PIA at full retirement age: $3,358
How much (as a fraction) is SS decreased by in the first 36 months?
1/180th for each month early
How much (as a fraction) is SS decreased by in the following 24 months?
1/240th
SS is INCREASED by this flat % each year after FRA
8% NOT COMPOUNDED!
Taking SS at the earliest age (62) is how much of a haircut from FRA?
30% - 62
25% - 63
20% - 64
13.33% - 65
6.67% - 66
REAPPLYING FOR BENEFITS
The Social Security Administration will allow a recipient of benefits to increase his or her benefits by withdrawing and reapplying at a future date. (Form SSA-521)
What can cause a retiree to experience a loss in net social security benefits?
Earnings Test - If before FRA
Taxation on SS Benefits
What are some items that are NOT considered earnings for SS Taxation?
- Pension Income
- Investment Income
- Capital Gains
- Passive Rental Activity
SS is reduced by $_ for ever $_ earned over the Earnings Test.
$1 for every $2 earned over ~$22k
Is the SS Earnings Test Different during the year of FRA?
YES! $1 for every $3 of earnings during year you turn 67
What are the earning phase outs for the 50% SS Taxability?
Single: $25k
MFJ: $32k
What are the earning phase outs for the 85% SS Taxability?
Single: $34k
MFJ: $44k
These two items added together allow you to calculate SS Taxability:
Magi & 1/2 SS Benefits Received.
What’s the most important part of the 50% and 85% calculation?
YOU USE THE LOWEST OF THE 2 AVAILABLE CALCULATIONS!
If client is above the 85% taxability of SS Benefits: Start calculating taxability with -
The 85% equation:
85% * SS Benefit
or
85% * ((MAGI + 1/2 SS) - Adjusted Basis)
Which one is Lower?
add the lower adjusted limit amount to the lesser of:
50% * SS Benefit
or
50% * ((MAGI + SS Benefit) - Base Basis)
SSDI Eligibility is:
20 out of 40 Quarters
Any Age
Cannot perform any GAINFUL work.
Family Benefits for SS are payable to:
Spouse
* 62 and older
* Caring for a child
under age 16
* Caring for a child who
was disabled before
age 22
Unmarried Child
* Under 18
* Under age 19 and in
high school
* Age 18 or older and
disabled before age 22
Survivor Benefits for SS are payable to:
Widow or Widower
* 60 and older
* Over 50 and disabled
* Caring for a child under age
16
* Caring for a child who was
disabled before age 22
Unmarried Child
* Under 18
* Under age 19 and in
high school
* Age 18 or older and
disabled before age 22
Dependent parents of the
deceased worker
* 62 and older
* Must not have a retirement
benefit greater than
deceased individual
* Deceased individual must
have provided at least 50
percent of parent’s support
Is there a survivor DB for SS?
Yes, but must be currently covered
What is the max family benefit?
175% of PIA
Divorce SS Eligability:
An individual receiving benefits based on a spouse’s earnings:
Benefits cease at divorce, unless
* Individual is 62 or older and
was married longer than 10
years
SSI is for:
Monthly payments to individuals with low income and few assets:
* Must be 65 and older
OR
* Disabled
* Blind
SSI Is funded by:
SSI benefits are not funded by Social Security Taxes but are funded from the Treasury
Medicare is facilitated by:
The Centers for Medicare and Medicaid Services (CMS)
Medicare Benefits are provided to:
- People 65 and older
- Disabled individuals
- Individuals with permanent kidney failure
- If a worker applies for retirement benefits before age 65 there is no need to file a separate application or Medicare.
Medicare Part B Covers (What %)?
80%
Medicare Part C
Medicare Advantage (Part C) managed care plan: HMO, PSO, PPO
You CAN Switch from Part A+B to Part C
