Social Security

For the 2010 tax year, the answer depends on your age and whether you're drawing Social Security benefits for retirement or disability.

Retirement

If you've reached full retirement age (65 for people born prior to 1943; 66 for people born between 1943 and 1954), there is no limit to how much you can earn.

In the year you reach full retirement age, you can earn $37,680 annually, but for every $3.00 over the limit, $1.00 is withheld from your benefits until the month your reach full retirement age.

If you are under full retirement age, you can earn $14,160 per year without incurring a penalty. For every $2.00 over the limit, $1.00 is withheld from benefits.

Disability

People on disability can earn up to $1,000 per month ($12,000 per year) for most disabilities, or $1,640 per month ($19,680 per year) for anyone legally blind. Earning more than these limits would be considered engaging in Substantial Gainful Activity (SGA), would trigger a continuing disability review, and likely result in an end to the person's disability status with Social Security.

Any month a disabled person earns more than $720.00 is counted toward the nine-month trial work period, and may result in a continuing disability review (CDR).

Simple Common Sense:

The only time you actually do WANT to file is when the IRS says you don't have to!

They don't do that because it's good for you. They do it because it is more likely to be good for them. Certainly if you don't have to file, NOTHING BAD, in fact only good things, can happen by doing so.

Federal Taxes are the same throughout the country. State tax laws are specific to each area.

(Note: working isn't relevant either, as many people who don't work or are retired, or disabled, or old, or young, or in school, have income from many sources: savings, investments, etc.TAXABLE income is different than what you may otherwise think of as income. In most circumstances, you have to do many of the calculations needed to file a return, just to determine what taxable income may be).

Likewise, there are no special or fixed rates for retired, student, doctor, sanitation worker, President, convict...whatever. The amount of taxable income after applicable deductions and adjustments determines the rate applied to your particular situation. The rate, as well as the amount, you pay changes as the amount of income does.

You must file a tax return if you had net earnings from self-employment of $400 or more. This is your total self-employment income less the expenses paid in operating your trade or business, multiplied by 92.35%.

If you weren't self-employed (paid on a 1099 or ran your own business) then you would always want to file a return to claim the amount withheld and shown on your W-2, which with lower incomes will always be refunded to you.

If you are an individual who may be claimed as a dependent on another person's return, you are subject to specific filing requirements. Refer to the instructions in your tax package or refer to Publication 929, Tax Rules for Children and Dependents, or Publication 501, Exemptions, Standard Deduction, and Filing Information, for the filing requirements for dependents. All available at www.IRS.gov

You must file a tax return if you received any amount of advance earned income credit payments from your employer during the year, or if you owe any taxes, such as:

• social security tax and Medicare tax on tips or group life insurance,
• alternative minimum tax,
• tax on qualified retirement plans including an Individual Retirement Account, or other tax-favored account,
• tax from recapture of an education credit, investment credit, low income housing credit, federal mortgage subsidy, qualified electric vehicle credit, or the native American employment credit.

Generally, you must file a tax return if you are a nonresident alien with income from sources in the United States. For more information on nonresident aliens, select Topic 851 at the IRS website.

Even if you are not required to file a tax return, file a return BECAUSE MANY, LOW INCOME PEOPLE HAVE MANY BENEFITS COMING THAT ARE KEYED TO FILING A RETURN. (Like stimulus checks).

Also, the Statute of Limitations for when the IRS can no longer ask you questions about your affairs for a year only STARTS to run when a return is filed. Not filing, and they can bug you, (and assess a tax) for forever!

Even if you do not have to file, you should file to get money back if Federal Income Tax was withheld from your pay,which if you were an employee most certainly happened OR you qualify for any of the following:

• Earned Income Tax Credit. The Earned Income Tax Credit is a federal income tax credit for eligible low-income workers. The credit reduces the amount of tax an individual owes, and may be returned in the form of a refund.

• Additional Child Tax Credit. This credit may be available to you if you have three or more qualifying children or if you have one or two qualifying children and earned income that exceeds $11,300. The Additional Child Tax Credit may give you a refund even if you do not owe any tax.

• Health Coverage Tax Credit. Limited to certain individuals who are receiving certain Trade Adjustment Assistance, Alternative Trade Adjustment Assistance, or pension benefit payments from the Pension Benefit Guaranty Corporation.

Social Security retirement benefits are calculated for each individual, based on his or her own earnings, assuming both parties worked and accumulated the minimum 40 credits each to qualify. Spouses who were homemakers or disabled may draw against the working spouse's record, and typically receive 32.5 - 50% of the spouse's monthly benefit.

In 2010, the maximum individual benefit is $2,346 (or $4,692 for a couple). This assumes the person retires in 2010 at age 66, and has made the maximum FICA contribution every year since age 21, an unusual scenario.

The average monthly payment at the beginning of 2010 was $1,164.00.

Benefits are calculated based on the number of years worked, your 35 highest income-earning years, and the age at which you retire, as well as the total amount of all benefits paid and the total number of people receiving benefits. It would be impossible for us to calculate this number for you, and also impossible to predict any changes in your income or made to government policy between now and when you retire.

You can get a rough estimate of projected retirement income using the SSA benefits calculator, accessible via Sources and Related Links, below.

This info is for regular Social Security (not SSI)

If your social security benefit is less than $750/month, then it cannot be garnished for ANYTHING.

If you make more than $750/month, a garnishment can take 15% or the amount over $750, whichever is less.

SS benefits are generally protected against garnishments. SS, along w/just about every other gov. benefit is "exempt" from collection. That means nobody can get at it to pay a debt. Nobody, except Uncle Sam. Since 1996 garnishments of SS benefits have happened. BUT...ONLY "non-tax" Federal debts can be collected this way. Such debts are unpaid student loans, defaulted HUD, FmHA, FHA mortgages, etc.

SSI

SUPPLEMENTAL SOCIAL SECURITY (SSI) will NEVER be garnished for ANYTHING except SSI overpayments, which can be recovered by a 10% reduction of benefits.

Good Luck!