The amount you receive in your monthly Social Security check differs for everyone and has a myriad of factors that go into calculating your unique amount. Beyond that, there are certain things to look out for that can increase — or decrease — the amount you receive each month.
Continuing To Work
More and more, many are deciding to work beyond their full retirement age — which could net you a hefty monthly check when you do decide to finally hang up your shoes. If you decide to work beyond full retirement age, you can increase your future Social Security benefits, meaning that the estimate you might have calculated currently will be even higher. Each extra work year adds another year of earnings to your Social Security record — and higher lifetime earnings mean higher benefits when you do choose to begin distributions.
Special Rule Earnings
Benefits are calculated with the same formula for most Americans, but there are some professions that will have their own special calculations. These include farm workers, federal government employees, railroad workers, military service members, nonprofit or religious organization workers, state and local government workers, and work from outside the United States.
If you are self-employed, you will need to report your net earnings to both the Social Security Administration (SSA) and the IRS. Net earnings for Social Security are your gross earnings from your business minus all of your allowable business deductions and depreciation. You can find all the forms you will need to fill out and how to fill them out here.
The self-employed need to be extra vigilant in making sure they properly report their income, as mistakes can see you net less benefit and end up paying more tax than you might have expected.
Income From Investments
If your only source of revenue is social security checks that come each month, you will not have to pay any additional tax. If, however, you have income coming in from other streams such as dividends, other retirement accounts and businesses, you will likely need to pay tax on your social security benefits.
You will pay tax on only 85% of your benefits based on IRS rules if you file a tax return as an individual and your income is between $25,000 and $34,000. In this case, you might have to pay income tax on up to 50% of your benefits. For more than $24,000, up to 85% of your benefits could be taxed.
This number will differ depending on your tax situation, so you can see details on the taxation of benefits here.
Pensions and Other Factors
If you receive a pension, say as a teacher or as a union worker, this has the potential to affect your retirement benefits. If you have a pension from a job for which you did not pay Social Security taxes, this may lower your benefit.
If you had a government pension offset, meaning you had a pension from a government job for which you did not pay Social Security taxes, this could affect your benefit. This applies to a spouse, widow or widower of someone who held the position.
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