Floyd Shilanski  00:02

Hi, Floyd Shilanski with Plan Your Federal Retirement. Always amazing when I start talking to people and other advisors about Social Security and the amount of people that actually start getting ready to file, whether it’s age 62 or your full retirement age of 67 are delayed until 70 that up to 85% of their benefits are going to be subject to income income taxes. Many times we think that Social Security you’ve already paid taxes on – true statement, as it comes out to you, it’s going to be taxed again. So we need to take a look at that and see what happens. Social Security is part of the total income package, all right, whether it’s passive income, whether it’s tax free income, retirement income, or if you happen to still be working subject to those taxes. So very important that you understand that we have to combine not only the adjusted gross income to determine what taxes kick in, but we also have to look at all those combined income. Single taxpayers for the benefits with income over and above to $25,000 a year, while married couples filing jointly over 32,000 a year, we get up to 50% of benefits. Now, interesting enough, if you’re on the poverty level, Social Security, could come back to you with no taxes. Regrettably, good or bad, most of the federal government employees that we work with find that approximately 85% of the Social Security benefits are going to become income taxable. Now what happens many times in my practice, when people file, they don’t have taxes withheld, and then they get this surprise come April 15, when they file the next year’s income taxes. If you start your Social Security this time of the year, in Q4 you might want to delay doing anything, but in January, you’re going to want to file a W4, possibly have social security with withholding federal income taxes. We do this with a lot of our clients because we don’t want surprises, and it’s amazing how have to pay more money with income taxes as a surprise, it makes people very frustrated. Then we have this thing called provisional income. When I hear the word provisional income, I think about the United Kingdom, that’s not it at all. Provisional income will include multiple components of what accounts towards your combined income, and they kind of be included start with your adjusted gross income, which are the wages, pensions, investments, income, retirement account distributions, minus specific deductions on by the IRS, then we have to add the non taxable interest, including municipal bond or other taxes and interest that you might be receiving. Finally, half the Social Security benefit now is also included into that tax calculation, all the standard deduction and itemized deductions really don’t count. Some adjustments to income can lower the AGI. All this becomes complicated. One of the most important things that we encourage everyone to do, prior retirement right, up Periscope, let’s take a look at what we anticipate that your pension is going to be, how you’re going to take distributions out of your TSP, what other investments that you have coming to you, and balance them out before you say, Hey, I’m done. Tax Planning is crucial while you’re working even more so when you get ready to retire. If this is interesting to you, you want to talk more about the taxation, Social Security and so on, reach out to plan-your-federal-retirement.com. Log on, go down and request a review, and then talk to myself, Micah, John, Christian, someone in the office who can help you kind of work through these things until next time. Happy planning.