How to STOP Taxing Social Security Income.

How to STOP Taxing Social Security Income!

SOCIAL SECURITY:

In 1983 Congress legislated that up to 50% of Social Security could be taxed when combined income exceeded threshold limits. This ruling came into effect because bureaucrats realized that half of Social Security Income was from contributions paid by employers and should be considered taxable. In 1993 the law was amended again to allow up to 85% of Social Security Income to be taxed under certain conditions.

Social Security THRESHOLD INCOME LIMITS:

	TOTAL INCOME INCLUDING 1/2 SOCIAL SECURITY	PERCENTAGE OF SOCIAL SECURITY THAT IS TAXABLE
Single	$25,000 up to $34,000	Up to 50% (See Maximum $4,500)
Single	Over $34,000	Up to 85% (See Maximum Below)
Married	$32,000 up to $44,000	Up to 50% (Minimum $6,000)
Married	Over $44,000	Up to 85% (See Maximum Below)

Please note: The IRS is limited in the amount of Social Security they can tax.
The amount cannot exceed 85% of the taxpayers total Social Security received this year.

TAXING OF SOCIAL SECURITY:

The tax on Social Security will depend on how much taxable interest, pension income or dividends are made combined with 1/2 of the amount received from Social Security. For example, a single, retired person who receives $950 per month ($11,400 annually) from Social Security, a pension of $1,600 per month ($19,200 annually)

Fig A

1/2 of Social Security $ 5,700

Pension + Taxable Accounts +33,600

Total Combined Income    $39,300

Threshold (Single) -25,000

Exceeded threshold   $14,300

Income in excess of Threshold
50% x $9,000 = $4,500
85% x $5,300 = $4,505
                           $9,005
AMOUNT OF SOCIAL SECURITY SUBJECT TO TAX $9,005

POTENTIAL TAX ON SOCIAL SECURITY *$2,521

(*Based on a 28% Federal income tax bracket.)

An additional tax was created because Social Security became taxable. A potential tax increase of $2,521. (28% of $9,005 =*2,521 in taxes)

WHAT CONSTITUTES THRESHOLD INCOME?

Almost every type of earnings, dividends or interest is included as threshold income except for one.

A Deferred Annuity is the only producing asset that allows interest to grow without being included as Threshold Income!

INCOME INCLUDED AS THRESHOLD

Deferred Annuity
Pension
Income from Mortgages
US Treasuries
Certificates of Deposit
Money Market Accounts
Passbook Savings
Credit Union Savings
Dividends - Stocks
Dividends-Mutual Funds
Capital Gains
Municipal Bonds
Annuity-Withdrawals

NO
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes

ELIMINATING TAX ON SOCIAL SECURITY:

A Deferred Annuity may eliminate the tax on Social Security. Using the example in Figure A on the previous page, transferring taxable interest accounts into an Annuity can potentially eliminate the tax increase of *$2,521 caused by Social Security becoming taxable. Also, there is a tax decrease because interest on the taxable assets are deferred and is not subject to current tax. A total tax savings of *$4,651! See next page for calculation.

Saving Taxes

If taxable interest accounts were transferred into an Annuity, it might have deferred enough interest so that combined income would have been below the threshold amount.

1/2 Of Social Security
$5,700

Pension 19,200

Taxable interest 14,400

Total Combined Income $39,300

Exclude Annuity Interest (Deferred) -14,400

Income subject to threshold $24,900

Threshold $25,000

Social Security subject to tax $ 0.00
You just eliminated
the Tax on Social Security!!

This would have resulted in Social Security not being taxed. Annuities can help control the taxes paid and stop the taxing of Social Security.

To find a financial advisor, in your area, who specializes in annuities and Seniors financial advice, visit SeniorsONLYFinancialAdvisor.com

This brochure provides an example of

the advantages of Deferred Annuities.

Annuities are not Certificates of Deposit and are not insured by FDIC. The information is not intended to give tax or legal advice. Your financial advisor can help you determine if your own personal situation allows for tax savings. (NOT AFFILIATED WITH OR ENDORSED BY SOCIAL SECURITY OR ANY GOVERNMENT AGENCIES.) The source of the information provided was taken from the Social Security Administrations websites www.ss.gov (Understand the Benefits)