12/15/2022 How Social Security Benefits Taxation and IRMAA Raise Marginal Tax Rates in Retirement – Live Webinar
12/15/2022 How Social Security Benefits Taxation and IRMAA Raise Marginal Tax Rates in Retirement Live Webinar at 2-3 PM
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For moderate income taxpayers, 10 million tax returns show up to 85% of Social Security Benefits (SSBs) are taxed (i.e., included in income).
Such taxpayers are in the SSBs Tax Torpedo. As the amount of SSBs taxed climbs towards 85%, their effective federal tax rate shoots up to 49.95% if they have long-term capital gain and dividend income. If they don’t have such types of income, it shoots up to 40.7%. Any taxpayer collecting SSBs does not have the regular federal tax rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Instead, their effective federal tax rates are 15%, 22.2%, possibly 49.95%, 40.7%, and then settle back down to 22%, 24%, etc.,
For higher income taxpayers, over 4 million pay more than the base amount of Medicare premiums each month, or the Income Related Monthly Adjustment Amounts (IRMAA) which is based on an individual’s tax return two years prior. IRMAA, thus, is effectively an additional tax. For 2023, the IRMAA “tax” ranges from an additional $937 to more than $5,000 per year for an unmarried retiree and double those amounts for a married couple where both have Medicare.
In "How Social Security Benefits Taxation and IRMAA Raise Marginal Tax Rates in Retirement" by Greg Geisler, you will:
For moderate income taxpayers:
- Identify when a taxpayer is in the SSBs Tax Torpedo range using two numbers from their tax return;
- Determine their effective federal tax rate, which could be 40.7% or 49.95%, using one other number on their tax return;
- Choose the appropriate accounts to withdraw funds from to limit the negative tax impact of the SSBs Tax Torpedo.
For higher income taxpayers:
- Identify the amount of IRMAA “tax” you will pay next year based on two amounts on your tax return from last year;
- Determine how much IRMAA “tax” savings you can achieve in two years by engaging in “income planning” this year. Specific strategies to increase cash flow without increasing income are discussed;
- Understand how to file Form SSA-44 with the Social Security Administration to reduce IRMAA “tax” the first two years you are retired. This Form requests that a more recent year’s income (e.g., first year of retirement) be used to determine IRMAA “tax” instead of using income from two years ago when you were working full-time.
This on-demand webinar is a recording of a recent live webinar. Check our WEEKLY REBROADCAST SCHEDULE where there is no need to take the online quiz to receive CE. You may also take this on-demand course any time for 1 hr CFP®, CRC®, and other Continuing Education Credit when you pass the online quiz.
Your presenter is Greg Geisler, PhD, CPA, Clinical Professor of tax accounting at Indiana University-Bloomington.
Meet Greg, PhD, CPA, Clinical Professor of tax accounting at Indiana University-Bloomington
Retirement planning experience
Greg received his PhD from University of North Carolina-Chapel Hill, is a Clinical Professor of tax accounting at Indiana University-Bloomington. He teaches a course called “Income Tax and Individual Financial Planning.”
Retirement planning thought leadership and expertise
Greg publishes articles at the intersection of income tax and financial planning. Specifically, in the last ten years he has published 6 such articles in the Journal of Financial Service Professionals and 8 such articles in the Journal of Financial Planning (JFP), including two that received the 2017 and 2022 “Montgomery-Warschauer Award” for most outstanding article contributing to the betterment of the financial planning profession.
At his previous university, he was awarded the only 2017 Chancellor’s Teaching Excellence Award.
He has been quoted in the Wall Street Journal and many times in the financial press and on newscasts.
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