Most Americans Don’t Know This Social Security Wrinkle

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Transcript:

[00:00:00] Doug McIntyre: So, Lee, there’s a wrinkle to Social Security that I think a lot of people don’t. Understand, appreciate, know how to use correctly. Can you walk everybody through that?

[00:00:11] Lee Jackson: Well, in regards to the, big beautiful bill, and the president was able to kind of, he was able to eliminate the tax on tips and he was able to eliminate some of the other items that he said he would.

[00:00:24] Lee Jackson: But one thing the president, couldn’t change was tax on social security. Because of the nature of the bill. This is the kind of, the big, beautiful bill was the one where you only need a simple majority instead of a 60 40 vote. So for seniors, what we want them to be very careful about is your adjusted gross income, or you’re a GI, regardless of how old you are.

[00:00:48] Lee Jackson: if you’re a senior, whether you’re 62, 65, whatever. And I have this issue myself this year, so I have to be careful with it. I called, I, I needed to fund something. So I called my CPA guy and I said, Hey, I’m thinking of taking a big distribution out of my IRA to do this, I’ll withhold a bunch of taxes and all that.

[00:01:09] Lee Jackson: And he said, no, no, no, no. He goes, remember? And, this is, these are the numbers everybody has to remember the for, married couples filing. together it’s $150,000 limit is the adjusted gross income limit for you to, if you’re under that number, you get the full tax benefit that the, and it’s big, it’s like 6% or something of that nature.

[00:01:33] Lee Jackson: And if you’re filing individuals, I think it’s 75,000. And, you have to be very clear that you don’t go over that number. if you’re like, like Doug and I, we both work, we both are, social security recipients, or at least I am, and I have to make sure I’m not over that number. And so it’s very important.

[00:01:53] Lee Jackson: So seniors you want to be able to capture this are so you don’t get taxed on social security distributions. So make sure you talk to your CPA or your accountant and, if you’ve gotta take a distribution from your IRA and remember, required distribution, don’t start until you’re 73, so you don’t have to take one until you’re 73, but don’t get that number pushed up or you won’t get the benefit of this tax cut.

[00:02:19] Doug McIntyre: To help people out. We’re talking active income, passive income, and what do people have to look at?

[00:02:25] Lee Jackson: There’s nothing wrong with passive, but it is just your aggregate gross income. If you take a, say a $20,000 distribution, even if you withhold 30% in taxes.

[00:02:36] Lee Jackson: Which would be, 6,000, even if you hold that much, you’ll still have, you’ll still have the $20,000 distribution added to your adjusted gross. And I was stunned by that. when my guy told me that, I said, you’re kidding me. And he said, Nope, it gets tagged right on there. So again, we’re not tax people.

[00:02:54] Lee Jackson: We don’t really give tax, information. But those are the basics. Make sure you check with your, accountant and don’t get by there. And make sure you get the tax cut this year ’cause it’s in there and it will be in when you file your 2025 return.