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Old 01-21-2008, 02:14 PM   #1
Tim_in_NC
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Federal Taxes if only income is Social Security?

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Hi all ...

I have a question in trying to get information for my parents ...

One parent is 69 and the other is 62 ... They are both retired and their only form of income in '07 was by Social Security. Their combined Social Security was in the total of $28,500 in '07 ...

They are still married and live in North Carolina ...

From what I understand they do not have to file federal taxes this year ... is this correct?

thanks!
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Old 01-21-2008, 05:44 PM   #2
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To determine if you need to file a Federal Income Tax return for 2007 answer the following questions:
Quote:
  • Did you have Federal taxes withheld from your pension and wages for this tax year and wish to get a refund back?
  • Are you entitled to the Earned Income Tax Credit or did you receive Advance Earned Income Credit for this tax year?
  • Were you self-employed with earnings of more than $400.00?
  • Did you sell your home?
  • Will you owe any special tax on a qualified retirement plan (including an individual retirement account (IRA) or medical savings account (MSA)? You may owe tax if you:
    • Received an early distribution from a qualified plan
    • Made excess contributions to your IRA or MSA
    • Were born before July 1, 1936, and you did not take the minimum required distribution from your qualified retirement plan.
    • Received a distribution in the excess of $160,000 from a qualified retirement plan.
  • Will you owe social security and Medicare tax on tips you did not report to your employer?
  • Will you owe uncollected social security and Medicare or Railroad retirement (RRTA) tax on tips you reported to your employer?
  • Will you be subject to Alternative Minimum Tax (AMT)? (The tax law gives special treatment to some kinds of income and allows special deductions and credit for some kinds of expenses.)
  • Will you owe recapture tax?
  • Are you a church employee with income in wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security or Medicare taxes?
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Old 01-21-2008, 05:48 PM   #3
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The answer would be:

Your parents need to file a Federal Income Tax return. Even if you do not have to file a return, you should file one to get a refund of any Federal Income Tax withheld.
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Old 01-21-2008, 06:04 PM   #4
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Quote:
Originally Posted by taxforum View Post
The answer would be:

Your parents need to file a Federal Income Tax return. Even if you do not have to file a return, you should file one to get a refund of any Federal Income Tax withheld.
Thank you for the reply ...

I guess I'm still a little confused. My parents only received Social Security checks during the year, so how would they be able to receive a refund to Federal Income tax withheld ...

thanks again ...

Last edited by Tim_in_NC; 01-21-2008 at 06:07 PM..
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Old 01-21-2008, 06:09 PM   #5
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It is very common that FIT is withheld on Social Security.

I have helped many clients plan for retirement, and figure out how much in taxes they will be paying after they retire. It comes as a shock to many people that up to 85% of their Social Security pension might be included as part of their taxable income. Some clients even believed that their Social Security would be entirely tax-free. Better to plan ahead than be left with a surprise at tax time. You should figure out the taxable portion of your Social Security benefits.
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Old 01-21-2008, 06:20 PM   #6
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Quote:
Originally Posted by taxforum View Post
It is very common that FIT is withheld on Social Security.

I have helped many clients plan for retirement, and figure out how much in taxes they will be paying after they retire. It comes as a shock to many people that up to 85% of their Social Security pension might be included as part of their taxable income. Some clients even believed that their Social Security would be entirely tax-free. Better to plan ahead than be left with a surprise at tax time. You should figure out the taxable portion of your Social Security benefits.
Thanks again ... I just went back to the forms they were mailed the other day in regards to the Social Security payment totals for the year ...

For Voluntary Federal Taxable Income ... it states "none"

There is nothing else that mentions paying anything over the year as Federal Tax, just want they earned in SS over the year 2007 ...

Did they indeed pay $0 in Federal Income Tax or is there some other method we must try in order to find the actual amount paid in FIT?
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Old 01-21-2008, 06:27 PM   #7
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Check this IRS link out

http://www.irs.gov/individuals/artic...=96623,00.html

You have to answer several Yes/No questions and it will tell you if you have to file or not..
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