California does not tax Social Security at all.

Nan, EA in LA

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I should have mentioned that the $5,000 is monthly, but your
clear explainations covered both cases, so my thanks to all
of you.

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"Paul James" <pponzelliBEGONE[at]SPAMcomcast.FOREVERnet> wrote:

- quote -

Depends on total income and status. If you earn under a
certain amount, social security payments are free of Federal
income tax.

Over that amount, but under another, 50% of social security
is free of Federal income tax.

Beyond that, only 15% is free of Federal income tax.

Naturally you want to know what those levels are? The Social
Security Administration site says "maybe" and gives a
simplified example. The gory details are in IRS Pub 915, at
http://www.irs.gov/pub/irs-pdf/p915.pdf

A certain percentage of the tax on social security payments
goes for social security. Another percentage goes for
Medicare. The details used to be at the SSA site. You will
have to poke around.

As for Calif, I don't know.

--
Jim

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"Paul James" <pponzelliBEGONE[at]SPAMcomcast.FOREVERnet> wrote:

- quote -

Are these MONTHLY or ANNUAL amounts? If ANNUAL, you have no
tax return or tax to worry about, you fall below the minimum
limits. If MONTHLY income amounts (and you are single), you
will owe ordinary income tax on the pension income and 85%
of the social security benefit. See the worksheet in your
1040 instruction book for determining how much of your
social security benefit is taxable.

- quote -

Neither pension nor social security are subject to payroll
taxes (SS and Medicare). If you are over 65, a portion of
your SS benefit ($66.60 in 2004) will be withheld for
Medicare B insurance.

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"Paul James" <pponzelliBEGONE[at]SPAMcomcast.FOREVERnet> wrote:

- quote -

I can't speak as to California rules, but if the $5,000 is
someone's sole income, they won't owe any federal income tax
because the income is less than the standard deduction plus
personal exemption the person is entitled to.

To answer your question directly, not all SS and pension
benefits are taxable, but those that are are taxed at
ordinary income rates.

A portion of Social Security benefits is federally taxable
if the total of

-- 50 percent of your benefits plus
-- all your taxable income plus
-- any tax-exempt interest (such as municipal bond interest)

exceeds the following amounts:

-- $25,000 for taxpayers filing single, head of household
or qualifying widow(er);
-- $32,000 for married taxpayers filing jointly;
-- $25,000 for a married taxpayer filing separately who
lived apart from his/her spouse for the entire year; or
-- zero for a married taxpayer filing separately if he/she
lived with his/her spouse at any time during the tax year.

What part of pension benefits is taxable depends on several
factors, including whether the recipient contributed to the
pension plan while working.

- quote -

Social Security/Medicare taxes are only levied on employment
income. I know of no other federal taxes due on the income
set out in your example. There may be state or local taxes.
I don't know.

--
D.F. Manno
dommanno[at]netscape.net
"They that can give up essential liberty to obtain a little
temporary safety deserve neither liberty nor safety."
(Benjamin Franklin)

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Paul James wrote:

- quote -

Federal: Social security benefits are taxed ONLY if
regular income plus 50% of SS benefits exceed $25,000
(single - $32,000 married filing joint - $0 married
filing separate), and then included only at at
most 85%.

California: Social Security benefits are not taxed.

- quote -

Earned income may affect social security benefits, but
I don't think there are other tax consequences. Benefits
MAY be included for determination of some California
tax credits, but I haven't checked.

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My apologies to this group if this question has been asked
many times before, but I did a search on the messages still
on the news server and I didn't find anything pertaining to
this question.

I'm trying to do some retirement planning, and I have two
questions:

Suppose someone has about $3,000 in pension income and
$2,000 in social security income.

1. Are social security benefits and pension payments taxed
at the same rates as ordinary income at both federal and
state level (in California)?

2. Do the taxes owed under question #1 represent the full
tax obligation, or are there any other obligations owed by
the taxpayer - that is, do they also have to pay SSI,
medicare, or any other taxes on social security or pension
benefits?

Thanks in advance.

Paul

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