2 Replies Latest reply on Oct 24, 2012 1:20 PM by JerryD

    Social Security reduction

      I am holding the mortgage for the couple who bought my house and am receiving 5.5% on the remaining money they owe me. This translates into income for me of about $25,000 a year. Will this affect the amount I get from my Social Security? I know it will make my taxes much higher........Klara
        • Re: Social Security reduction
          My understanding is that the earning, not income, and age will effect the social security benefit.
          Earning is you go to work to make money, the social security officer told me.  Not all income is earning, such as unemployment benefit is income but not earning.  The mortgage you get doesn't like earning according to the definition the social security officer told me.  But it is income for sure.  Stock dividend, IRA withdraw are income but not earning.  Only earning may be contributed to IRA.  I don't think you could contribute the mortgage income to IRA. 
          There is limits of how much annual earning could have before reach full SS benefit age.  Above the limit, SS benefit will be reduced.  After reach full SS benefit age, there is no limit how much earning could be made.
          • Re: Social Security reduction
            Klara, I am not sure that this is a simple question. I just looked at my 1040 and the TurboTax calculation to determine how much of SS is taxable. I suggest that you get a 2011 1040 form (2012 not here yet) and plug in your mortgage interest into the right field for income (lines 7-22) and then run the taxable SS calculation for Line 20a (gross SS) and 20b (taxable SS). The calculation isn't fun (I let TurboTax do these kinds of things) but it will determine if the mortgage interest is included in the taxable SS income calculation for line 20b. 
            I know that we get hit hard on taxable SS due to fairly large IRA -> Roth conversions. This included income can dump a lot of SS into the taxable income category. Ouch! And we're not even in the 1% or close to it being well down in the 99%.