A lady and her husband, both who are over 70 years old ( mid to late 70’s I believe) were penalized on their social security check because they earned too much last year. I’ll clarify. They worked part time in 2022. Not a lot of hours and the pay was not a lot. Maybe $ 25,000 in earned income for the two. I don’t know their other income sources. Maybe they have an IRA or pension. The wife told me that she would have been better off not working X amount of months because social security took back money when they figured out their taxes. How is that possible for a couple in their 70’s? I thought after a certain age, maybe 67, social security does not clawback money based on an income limit.
Are you sure they don’t mean that their Social Security was taxed?
Up to 85% of one’s Social Security retirement benefit can be taxed based upon total income. Not a new thing…it was enacted in the '80s. And the income limit hasn’t changed.
I received SS benefits as a kid (which can happen if one of your parents die and they had put enough into SS before death). We were aware of the income thing and it applied to me as well, so when I got a job at 17, I had to turn down a raise so I wouldn’t go over.
So yes, it’s def a thing.
Income before one attains full retirement age can impact the amount of social security benefit that can be paid, but that restriction goes away at full retirement age. Thats’s why i was suggesting it may be that the Social Security is being taxed. Especially when it was mentioned that it occurred after filing taxes.
Did Social Security take it back, or did the IRS require additional payments to account for that added income?
Social Security does not withhold taxes unless you specifically ask them to do so.
The wife might have been talking about the 85% of SS being taxed. Not sure. Possibly they went to a higher tax bracket due to the income but she did not mention that.