Questions About Social Security Benefits and Medicare?
We’ve got some answers Article Courtesy of Nancy Harris, CMFC, CDFA President, LPL Financial Planner, New Foundation Wealth Group Our clients often come to us with various questions about Social Security and Medicare. Here are a couple questions we’ve received and some quick answers.
Are my Social Security benefits subject to income tax?
A portion of your benefits may be subject to income tax if your modified adjusted gross income (MAGI), plus one-half your Social Security benefits, exceeds specific limits. Your MAGI equals:
• Adjusted gross income (or the adjusted gross income of you and your spouse if married and filing jointly), including wages, interest, dividends, taxable pensions, and other sources
• Tax-exempt interest income (e.g., interest from municipal bonds and qualified U.S. savings bonds)
• Amounts earned in a foreign country, U.S. possession or Puerto Rico that are exempt from tax
Up to 50 percent of your Social Security benefits may be subject to income tax if your combined income (MAGI plus one-half your Social Security benefits) exceeds $25,000 for an individual filing single, unmarried head of household, or qualified widow(er) with dependent ($32,000 if married and filing jointly).
If your combined income exceeds $34,000 ($44,000 if married and filing jointly), up to 85 percent of your benefits is taxable. If you are married and filing separately, up to 85 percent of your benefits will be taxed unless you and your spouse live apart for the entire year.
Consult an accountant or other tax professional for more information or view IRS Publication 554, Tax Guide for Seniors.
How do I enroll in Medicare? Some people automatically get Medicare Part A and Part B (Original Medicare). You'll be automatically enrolled in Original Medicare when you turn 65 if you've already been receiving Social Security or Railroad Retirement Board benefits for at least four months. If you get disability benefits from Social Security or certain disability benefits from the Railroad Retirement Board, you'll automatically get Medicare Part A and Part B after 24 months. The Social Security Administration will notify you that you're being enrolled, and you will receive your Medicare card in the mail.
Although there's no cost to enroll in Medicare Part A (Hospital Insurance), you'll pay a premium to enroll in Medicare Part B (Medical Insurance). If you've been automatically enrolled in Part B, you'll be notified that you have a certain amount of time after your enrollment date to decline coverage.
If you decide to postpone applying for Social Security past your 65th birthday, you can still enroll in Medicare when you turn 65. The Social Security Administration suggests that you call 800.772.1213 at least three months before you turn 65 to discuss your options. You can apply for Medicare online at the Social Security website, SSA.gov, in person at a local office or by phone.
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