Question

Sam and Sue are married and age 65.  Sam has a full time job that pays $80,000 and Sue's full time job pays $85,000.  They have worked since age 16 and are planning on keeping their jobs and signing up for social security when they each reach age 66.   An friend of the couple heard that social security benefits might be taxable and suggested that the couple file for divorce to get more money from social security and also avoid taxes on social security.  The statement from social security indicated that Sam would receive $1,800 per month if he waits until full retirement. Sue can't find her letter, but over her working career, she made as much and sometimes more than Sam did.    What is their best tax planning strategy?

Answer 1

Answer: Given that: Sam & Sue care married and age 65. Sam has a full time job that pays $80000 - Sue's full time job pays = $85000 They have worked since age 16. af sam waits untill fuell refinement - he would receive = $1800 /month. Now core know that social security benifits are not tareable and of a person have other income source in addition to social Seccurity benefits theng social security benefits may be taxable depends on income And the taxes on social security benefits

Now, Social se benefits Can be taxable as follows. single → Ef the person is then, Provisional Encome less than $ 25000 $25000 to $34000 above $34000 - Not taxable 50% tauable > 85% tanable. → Ef the person is married filing jointly. then, Porovisional income Less than $32000 Not taxable $32000 to $44000 -> 50k. tarable Above $44000 -- > 85 . taxable

2f the person is married filing separately then, the taxable percentage of social security benefits coill be completely taxable isrespective of provisional income Here, provisional income from non-social is nothing but the sum of income security sources of tacable income.