Turning 70 is a landmark, but not as far as the Social Security Administration is concerned. Whether you're working and paying Social Security tax on your earnings, drawing Social Security benefits, or both, turning 70 won't, in itself, affect the taxes you pay.
Under the Federal Insurance Contributions Act, your employer takes Social Security taxes out of your paycheck. If you're self-employed, you pay self-employment tax instead, adding it to your income tax payments. The Social Security Administration says as long as you're earning an income, you keep paying the tax. Neither your age nor receiving retirement benefits changes that. It's possible that continuing to earn money in retirement will increase your benefits.
If your only income is Social Security benefits, you probably don't have to pay income tax on them. The Social Security Administration says online that about one-third of recipients do pay tax on their benefits, because they have other taxable income. By itself, having other income doesn't make your benefits taxable. Above a certain income level, however, taxes on benefits kick in. Turning 70 doesn't change the level -- only income and filing status do that.
Your benefits become taxable, at any age, when your combined income reaches the federal limit. Combined income is your adjusted gross income, plus half your Social Security benefits, plus any tax-exempt interest you receive. For almost all taxpayers, benefits become taxable when combined income reaches $25,000. For couples filing a joint return, the cut-off is $32,000. The other exception is couples filing separate returns who lived together part of the year: Their Social Security benefits are always taxable.
You can calculate the exact amount of taxable benefits using Worksheet 1 in IRS Publication 915. On your Form 1040, you report your total benefits, and the amount that's actually taxable. Usually only 50 percent of your benefits are taxable, but for some taxpayers it's 85 percent. Regardless of age, you add the taxable benefits to your other income and apply the same tax rate. There's no special rate for your Social Security checks.
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