taxes on pension and SS?


C

carkenord

Please help settle an argument between 4 people. Two young adults and
2 older adults.

The scenario, taking place in Colorado::

Mr. turns age 64 and retires, and starts drawing $500/month Social
Security. No pension from old job.

Mrs. turns age 62 at exactly the same time. She retires, and starts
drawing SS of $1300 month. She also gets a pension from the job she
retired from. Her job pension is $1300 month.

Does Mr. pay any Federal or state income tax on his $500/mo. SS
income?

Does Mrs. pay any Federal or state income tax on either her $1300/mo.
SS or $1300/mo. pension income?

Thank you....... Lee Carkenord
 
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D

David B. Redmond

Please help settle an argument between 4 people. Two young adults and
2 older adults.

The scenario, taking place in Colorado::

Mr. turns age 64 and retires, and starts drawing $500/month Social
Security. No pension from old job.

Mrs. turns age 62 at exactly the same time. She retires, and starts
drawing SS of $1300 month. She also gets a pension from the job she
retired from. Her job pension is $1300 month.

Does Mr. pay any Federal or state income tax on his $500/mo. SS
income?

Does Mrs. pay any Federal or state income tax on either her $1300/mo.
SS or $1300/mo. pension income?

Thank you....... Lee Carkenord
Why don't you get out blank state and federal tax returns for 2004 and
fill them out with the prospective amounts and see what happens? This
is the best way to see exactly how exemptions, deductions, and other
factors that determine taxes will play out. Are there dependents,
mortgage interest, other income, previous year loss or credit
carryovers? Taxes are always a specific rather than a generic issue.


======================================= MODERATOR'S COMMENT:
Please trim the post to which you are responding. "Trim" means that except for a few lines to add context, the previous post is deleted.
 
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K

Kathryn Morgan

Assuming that this is the only income they have, they both received 12
months of pension and SS, and no "special circumstances" of any kind, the
answer is no they pay no federal taxes of any kind. Their SS is not taxable
at all and the pension is wiped out by their standard deduction and personal
exemptions. Unless they are filing to get their withholding back they are
not even required to file a federal return. Not absolutely sure about the
state of Colorado, but I believe the same hold true for them.
Using 2004 figures this is how it would work:

SS = $1800 a month X 12 months = $21600 X .5 = $10800 + pension of $15600
($1300 X 12months) = $26400. In order for any of the SS to be taxable this
total for a married couple would have to be more than $32000, therefore none
of the SS is added to income for tax purposes.

Pension = $15600 - $9700 Standard deduction - $6200 personal exemptions =
($300). Therefore no taxable income.



--
Kathy Morgan EA
H & R Block Master Tax Advisor
Proud Mom of Sgt RT Morgan
1/156 AR BN C Company
Louisiana Army National Guard
Baghdad, Iraq

Please help settle an argument between 4 people. Two young adults and
2 older adults.

The scenario, taking place in Colorado::

Mr. turns age 64 and retires, and starts drawing $500/month Social
Security. No pension from old job.

Mrs. turns age 62 at exactly the same time. She retires, and starts
drawing SS of $1300 month. She also gets a pension from the job she
retired from. Her job pension is $1300 month.

Does Mr. pay any Federal or state income tax on his $500/mo. SS
income?

Does Mrs. pay any Federal or state income tax on either her $1300/mo.
SS or $1300/mo. pension income?

Thank you....... Lee Carkenord

======================================= MODERATOR'S COMMENT:
Please trim the post to which you are responding. "Trim" means that except for a few lines to add context, the previous post is deleted.
 

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