5 factors that can affect your social security benefits

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The amount you receive in your monthly Social Security check is different for everyone and has a multitude of factors that go into calculating your one-time amount. Beyond that, there are some things to watch out for that can increase – or decrease – the amount you receive each month. Here are the top things to watch out for, according to the Social Security Administration:



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1. Continue to work

Increasingly, many are deciding to work past full retirement age, which could earn you a big monthly check when you decide to finally hang up your shoes. If you decide to work beyond full retirement age, you can increase your future Social Security benefits, which means that the estimate you might have currently calculated will be even higher. Each additional year of work adds another year of income to your Social Security record – and higher lifetime earnings mean higher benefits when you choose to start distributions.

2. Special rule gains

Benefits are calculated with the same formula for most Americans, but some occupations will have their own special calculations. These include agricultural workers, federal government employees, railway workers, members of the military service, workers of religious or non-profit organizations, state and local government employees, and labor outside the government. United States.

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3. Self-employment

If you are self-employed, you will need to report your net income to both the Social Security Administration (SSA) and the IRS. Net income for Social Security is your gross income from your business less all allowable deductions and depreciation for your business. You can find all the forms you will need to fill out and how to fill them out here. Self-employed people need to be extra vigilant to make sure they are reporting income correctly, as mistakes can cause you to lose fewer benefits and pay more taxes than you expect.

4. Investment income

If your only source of income is the Social Security checks that come in each month, you won’t have to pay additional tax. However, if you have income from streams such as dividends, other retirement accounts, and businesses, you will likely have to pay taxes on your Social Security benefits. You will only pay tax on 85% of your benefits under IRS rules if you are filing an income tax return as an individual and your income is between $ 25,000 and $ 34,000. In this case, you may have to pay income tax up to 50% of your benefits. Over $ 34,000, up to 85% of your benefits may be taxable. This number will vary depending on your tax situation, so you can view details on the taxation of benefits here.

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5. Pensions and other factors

If you receive a pension, for example as a teacher or as a union worker, it may affect your pension benefits. If you receive a pension from a job for which you have not paid social security contributions, this may reduce your benefit. If you had a government retirement pension, that is, you had a pension from a public job for which you did not pay Social Security taxes, it could affect your benefit. This applies as the spouse, widow or widower of someone who has held the position.

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Last updated: September 23, 2021

This article originally appeared on GOBankingRates.com: 5 Factors That May Affect Your Social Security Benefits

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