Posted: 7/6/2026 8:36:22 AM EDT
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I realize that if I start drawing SS benefits before my max age (67 for me) that if I continue to work there is a 2 for 1 penalty for making over $32K I think it is for joint return. My question is this: does that start immediately in the year I start drawing or the following full tax year? Example: I want to officially retire in June 2027. My regular employment between Jan-June of 2027 will be well over $32K. So at the end of 2027, will I have a penalty when I file my taxes (which will include partial years regular income and partial years SS benefits) or does the income limits start the following year in 2028? I've looked and read stuff but can't find the specific question addressed. |
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I just went through this. I am 72 and still working. The money is very good - higher than when I was 65. When I searched online - I found there is no penalty based on my income since I am beyond 65. If you do start drawing SS and are below there are deductions. Due to the added income - I have 22% deducted from my SS deposit. “Income Limits: The earnings test limits only apply before full retirement age. In 2026, the limit is $24,480 for those under full retirement age and $65,160 for the year you reach it (applied only to earnings in months prior to your birthday).” |
yin shui si yuan
Your life is an occasion, rise to it
In time we will be dancing in the streets all night.
Your life is an occasion, rise to it
In time we will be dancing in the streets all night.
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Originally Posted By JohnGA: I just went through this. I am 72 and still working. The money is very good - higher than when I was 65. When I searched online - I found there is no penalty based on my income since I am beyond 65. If you do start drawing SS and are below there are deductions. Due to the added income - I have 22% deducted from my SS deposit. “Income Limits: The earnings test limits only apply before full retirement age. In 2026, the limit is $24,480 for those under full retirement age and $65,160 for the year you reach it (applied only to earnings in months prior to your birthday).” I will most certainly be limited to what I can make yearly as I will be drawing before my max age of 67, I was just wondering if a partial years income in the year I start drawing counts... it could effect how long I work into 2027. |
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Agreed - since you are pulling SS ahead of 67 - talk to a tax specialist. If you have something like a Schwab account - they probably have a calculator they can use. Schwab |
yin shui si yuan
Your life is an occasion, rise to it
In time we will be dancing in the streets all night.
Your life is an occasion, rise to it
In time we will be dancing in the streets all night.
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I asked ChatGPT for you. It's easier to just post the link for you to read for yourself, rather than trying to explain the answer, so here you go... https://chatgpt.com/share/6a4badf3-21c8-83ea-8e32-c8d783042321 |
9 lives - 9 pellets... Coincidence?
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Originally Posted By Bladeswitcher: Arfcom is not where I would go for tax advice. Thanks, and I would generally agree but this is a QUESTION, not asking for ADVICE... I found the answer. I won't have a penalty for PRE-RETIREMENT income for the year I retire. Limits start AFTER retirement. |
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Originally Posted By ske714: I asked ChatGPT for you. It's easier to just post the link for you to read for yourself, rather than trying to explain the answer, so here you go... https://chatgpt.com/share/6a4badf3-21c8-83ea-8e32-c8d783042321 My income from Jan-June won't count towards my annual income limits. For those interested in where I got the answer, see Page 5. Info |
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Originally Posted By Bowhntr6pt: Thanks, and I would generally agree... I found the answer. I won't have a penalty for PRE-RETIREMENT income for the year I retire. Limits start AFTER retirement. Originally Posted By Bowhntr6pt: Originally Posted By Bladeswitcher: Arfcom is not where I would go for tax advice. Thanks, and I would generally agree... I found the answer. I won't have a penalty for PRE-RETIREMENT income for the year I retire. Limits start AFTER retirement. There is a gotcha that tried to get me. I retired early and started SS right at the end of the year, but I had some bonuses and such that weren't actually paid until a few months later, after I was drawing SS. They were reported on my taxes as income during my first year of SS, since that's when I was paid. I saw this coming, and had already talked to the SS rep about it. When I signed up for SS, I already knew the exact amounts I would be getting, and the SS rep noted everything in my file, and said it was taken care of. The first year went by and I filed my taxes on my SS income, along with the pre-retirement income that I received during the year. Sure enough, I got a letter from SS a few months later, stating that they over-paid me due to that income, and I owed them around $25k, payable immediately. Fortunately, I had saved the contact info for the rep I had talked with a year and a half earlier, and it only took a 10 minute phone call to fix it. I got another letter a couple of weeks later, saying that the debt had been cleared. eta: The gotcha is that some of your income will be earned pre-retirement, but filed with post-retirement taxes. SS will try to count it against you unless you can show that it was earned before you retire. |
9 lives - 9 pellets... Coincidence?
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Originally Posted By ske714: There is a gotcha that tried to get me. I retired early and started SS right at the end of the year, but I had some bonuses and such that weren't actually paid until a few months later, after I was drawing SS. They were reported on my taxes as income during my first year of SS, since that's when I was paid. I saw this coming, and had already talked to the SS rep about it. When I signed up for SS, I already knew the exact amounts I would be getting, and the SS rep noted everything in my file, and said it was taken care of. The first year went by and I filed my taxes on my SS income, along with the pre-retirement income that I received during the year. Sure enough, I got a letter from SS a few months later, stating that they over-paid me due to that income, and I owed them around $25k, payable immediately. Fortunately, I had saved the contact info for the rep I had talked with a year and a half earlier, and it only took a 10 minute phone call to fix it. I got another letter a couple of weeks later, saying that the debt had been cleared. eta: The gotcha is that some of your income will be earned pre-retirement, but filed with post-retirement taxes. SS will try to count it against you unless you can show that it was earned before you retire. Thanks for that information, I'll be receiving vacation, holiday, and sick time pay outs but those will be received and counted in my final employment pay. |
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Originally Posted By Bowhntr6pt: Thanks for that information, I'll be receiving vacation, holiday, and sick time pay outs but those will be received and counted in my final employment pay. Originally Posted By Bowhntr6pt: Originally Posted By ske714: There is a gotcha that tried to get me. I retired early and started SS right at the end of the year, but I had some bonuses and such that weren't actually paid until a few months later, after I was drawing SS. They were reported on my taxes as income during my first year of SS, since that's when I was paid. I saw this coming, and had already talked to the SS rep about it. When I signed up for SS, I already knew the exact amounts I would be getting, and the SS rep noted everything in my file, and said it was taken care of. The first year went by and I filed my taxes on my SS income, along with the pre-retirement income that I received during the year. Sure enough, I got a letter from SS a few months later, stating that they over-paid me due to that income, and I owed them around $25k, payable immediately. Fortunately, I had saved the contact info for the rep I had talked with a year and a half earlier, and it only took a 10 minute phone call to fix it. I got another letter a couple of weeks later, saying that the debt had been cleared. eta: The gotcha is that some of your income will be earned pre-retirement, but filed with post-retirement taxes. SS will try to count it against you unless you can show that it was earned before you retire. Thanks for that information, I'll be receiving vacation, holiday, and sick time pay outs but those will be received and counted in my final employment pay. That's some of what mine was, but my last day of employment was Dec 31, so my last check was in January. That's why that was reported and taxed the following year. |
9 lives - 9 pellets... Coincidence?
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Does spouse income matter? I had no earned income this year, started SS at 62 in June. My wifes gross is $56K a year. ETA: AI says No. Your wife's wages do not count toward the Social Security earnings test for your retirement benefits. |
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Originally Posted By AR_Dale: Does spouse income matter? I had no earned income this year, started SS at 62 in June. My wifes gross is $56K a year. ETA: AI says No. Your wife's wages do not count toward the Social Security earnings test for your retirement benefits. Yep, just YOUR income. I'll have both a STATE and FEDERAL pension, none of which will count. |
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Originally Posted By AR_Dale: Does spouse income matter? I had no earned income this year, started SS at 62 in June. My wifes gross is $56K a year. ETA: AI says No. Your wife's wages do not count toward the Social Security earnings test for your retirement benefits. This is why it's recommended for a very low or non-earning spouse to start drawing at age 62 at half the spousal benefit, while the higher-earning spouse keeps working to FRA. |
Heller II - Challenging DC's bans on semi-automatic rifles, large-capacity ammunition feeding devices, and its onerous and expensive handgun registration process. http://www.HellerFoundation.org/