Do You Have To Claim Social Security On Your Taxes

Do You Have To Claim Social Security On Your Taxes – If you’re eligible for Social Security spousal benefits, how much you’ll receive depends on a number of factors, including your age, your spouse’s benefit amount, and whether you have other retirement benefits available. Who is eligible? Any person whose spouse, ex-spouse or deceased spouse was or is eligible for benefits, once reaching the eligibility age, is eligible.

The maximum amount you can receive is 50% of your spouse’s full benefit. This is simple enough, but the exact amount you will receive and when you will receive it depends on several circumstances, including your spouse’s age and work history, your own age and work history, and more. This leaves some room for you to maximize the value you receive. And remember, if this amount is less than the amount you would receive based on your own work history, you will automatically receive the higher amount.

Do You Have To Claim Social Security On Your Taxes

Do You Have To Claim Social Security On Your Taxes

Below, you’ll find out if you qualify for Social Security spousal benefits and how to find out how much you’ll receive. And you’ll learn the fate of some once-popular spousal benefit loopholes in Social Security rules. (Hint: It’s not good news.) However, if you know the rules highlighted in this article, you can maximize your Social Security spousal benefits.

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If your spouse has applied for Social Security benefits, you may also receive benefits based on your spouse’s employment record if:

When you apply for spousal benefits, you will also apply for benefits based on your own work history. If you are eligible for benefits based on your own earnings and the benefit amount is greater than your spouse’s benefit, that is what you will receive. If it is less, you will receive the spousal benefit.

Spousal benefits are based on how much the other spouse would receive if that person began receiving benefits at full or “normal” retirement age.

The Social Security Administration has an online calculator that can show you what percentage of your spouse’s benefits you will be entitled to, depending on your age when you start receiving benefits.

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The short answer to the calculation is this: You are entitled to half of your spouse’s benefit amount as long as you wait until full retirement age to claim. The earlier you file, the less you will receive.

As you would expect, the “normal” retirement age is getting later in life, but changes to Social Security rules are being introduced gradually. born from 1955 to 1960. For those born after 1960, there are 67.

An online Social Security calculator shows the percentage of your spouse’s benefits you will receive, based on your age at the time of enrollment.

Do You Have To Claim Social Security On Your Taxes

It doesn’t matter when your spouse actually retires or if he or she dies, that person’s “normal” benefit amount is relevant to you in calculating spousal benefit entitlement.

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Your spouse’s benefit is based on your partner’s “regular” benefit amount. But the amount you receive will depend on when you start claiming it.

You can claim spousal benefits as early as age 62, but you won’t receive as much as if you waited until full retirement age. For example, if your full retirement age is 67 and you choose to claim spousal benefits at age 62, you will receive a benefit equal to 32.5% of your spouse’s total benefit amount.

The amount increases with each year of delay. At full retirement age (67 in this example), you will be entitled to the maximum, which is 50% of your spouse’s total benefit.

Notably, spousal benefits are not reduced if the spouse is caring for a qualifying child under age or disability rules. A spouse’s benefits can never exceed 50% of the other spouse’s total benefit. Therefore, there is no incentive to claim spousal benefits after full retirement age.

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The calculation gets a little more complicated if you are eligible to receive benefits from a government pension or a foreign employer that is not covered by Social Security. In this case, you may still be eligible, but the amount will be reduced.

For example, if you have a government pension for which Social Security taxes are not withheld, your spousal benefit amount will be reduced by two-thirds the amount of your pension. This is known as government pension compensation.

For example, suppose you are eligible to receive $800 in Social Security spousal benefits and also receive $300 from a government pension every month. Your Social Security payment is reduced by two-thirds of $300, or $200, making the total benefit amount from all sources $900 per month ($800 – $200) + $300).

Do You Have To Claim Social Security On Your Taxes

Same-sex couples have enjoyed the same rights as all other couples since the 2015 Supreme Court ruling that affirmed their constitutional rights to the recognition of marriage. And that means they’re eligible for Social Security spousal and dependent benefits.

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The rules regarding Social Security spousal benefits for divorced and widowed people are complex to cover every conceivable circumstance.

If you are divorced, you may be entitled to spousal benefits based on your ex-spouse’s work history. The rules are practically the same, plus:

If your ex-spouse has not yet applied for benefits, you can still apply for spousal benefits if you have been divorced for at least two years.

If your ex-spouse is still living, in most cases you must be at least 62 years of age and your spouse must be old enough to be eligible for benefits. (Whether the ex-spouse is actually receiving benefits or not doesn’t matter.)

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A widow or widower can receive up to 100% of their spouse’s benefit amount. This is if the survivor has reached full retirement age at the time of application.

The payment is reduced to somewhere between 71% and 99% of the deceased’s entitlement if the widower is at least 60 years old but has not yet reached full retirement age.

People with disabilities can apply from the age of 50. The agency has a streamlined application process to avoid delays in your first payment.

Do You Have To Claim Social Security On Your Taxes

You may be entitled to benefits even if your spouse died long before reaching retirement age. Each employee accumulates annual Social Security “credits” for their work. If your spouse has earned credits for at least 10 years, a spousal benefit has been earned.

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It’s important to note that it’s worth waiting until you reach “full” retirement age to maximize the amount you’ll receive.

Additionally, if you are receiving spousal benefits and your spouse dies, you will need to notify Social Security. Your spousal benefit of 50% of your partner’s benefit will convert to a 100% survivor benefit.

You may hear or read about other ways to increase your spousal benefit amount. Unfortunately, under the new Social Security rules, two popular strategies have been abolished.

Before 2016, workers could claim benefits (making their partners eligible to claim spousal benefits) and then suspend their own benefits in order to maximize their deferred claim credits. This so-called file and suspend strategy meant that a low-income partner could take advantage of spousal benefits while the primary earner accrued delayed retirement credits, thus increasing the amount of their benefits.

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However, this “have your cake and eat it too” gap was closed with the Bipartisan Budget Act of 2015, which took effect in April 2016.

While it is still possible to claim benefits and then temporarily suspend payments, any other benefits that would normally be available on your account (such as spousal benefits) will no longer be due during such suspensions.

The 2015 law also prevented people born after Jan. 1, 1954, from taking advantage of spousal benefits twice while accruing delayed retirement credits in their own accounts.

Do You Have To Claim Social Security On Your Taxes

Previously, it was possible for those eligible for both types of benefits to claim their spouse’s benefits first while delaying filing on their own, a process sometimes called restricted claiming. This allowed taxpayers to benefit from their spouse’s early payment while maximizing their own benefits through deferred retirement credits.

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Under current law, spouses born after January 1, 1954 are considered to have applied for any and all benefits for which they are eligible as soon as they claim any of them. The payments they receive are based on the highest benefit amount.

Each couple must figure out the best way to maximize their benefits depending on their own circumstances.

The three strategies below will help you make the most of your Social Security spousal benefits, depending on your circumstances. However, keep in mind that regardless of your circumstances, the most a spouse can get is 50% of the amount the higher-earning partner is entitled to at full retirement age.

If one partner has little or no earnings history, the best strategy is for the earner to delay applying for Social Security retirement benefits until age 70 to get the highest amount possible. Full retirement age is 66 for most baby boomers and 67 for everyone born in 1960 or later, but by delaying claiming benefits until age 70, the earner will accumulate deferred retirement credits that will increase monthly payments at 8% for each year of retirement. delay.

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Remember, this will not affect your spousal benefit

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