I bet most of you don’t know your SS payment can be lowered too. It’s happened to me twice. I sold off long held pieces of real estate after retiring, both sales resulted in capital gains in the low $200k range.
After reporting those sales on my tax returns and paying the capital gains taxes on time and in full, my SS payments were lowered by over $200 a month for 2 years both times. I’m still collecting less as I write this.
In 1984, the federal government began taxing Social Security benefits following bipartisan approval of legislation in Congress. Initially, beneficiaries who met the income threshold had to pay taxes on 50% of their Social Security benefit, but a second threshold was added in 1993, beyond which 85% of benefits were subject to taxation.
Oddly, neither threshold has ever been adjusted for inflation, and ..
In 1984, less than 10% of beneficiaries actually owed taxes on their benefits, but each COLA since that time has pushed more seniors over the income threshold. As a result, 47% of beneficiaries owed taxes on Social Security income in 2010, and that figure is expected to reach 58% by 2030.
I know there was a tax on investment real estate capital gains that was made part of Obamacare law, and used to claim that tax was going to help pay for Obamacare, but I do not understand, legally, how or why it would impact your social security payment - unless something was worked out to pay the excess income tax due to the capiatl gains over a two year period via you raising the income tax deducted from your social security benefit. I don’t see how that was done “behind your back”.
Yes, i did read on the SS website, before i retired, that capital gains can affect the amount of drawn SS after your payout begins. Didn’t have an explaine as to how that came about. The only capital gain i would have is the home i live in. That home is in a living trust. So, plan accordingly.
Medicare is means tested based on income. Medicare Part B and Part D require higher income earners to pay higher premiums for their plan. If you have Part B and/or Part D benefits (which are optional), your premiums will be based in part on your reported income level from two years prior.
This means that your Medicare Part B and Part D premiums in 2022 may be based on your reported income in 2020.
I’m thinking of selling two homes... does the cut ever last longer than two years? And does it change what you pay for Medicare?
Yes, if you have “too much” income, it will raise your Medicare premiums. It’s called IRMAA. My mother is getting clobbered by it.
Must have been a rental property.
Saxxon
Yeah. Sucks. I think you got hammered by some Medicare price adjustment rule.
That is a real eye-opener when it happens.
I guess you also got screwed with the Net Investment Income Tax at 3.8% of some capital gains.
Do you feel like you get raped over and over?
It is tragic on an epic scale.
Makes me glad I never owned anything in my life.
