Advanced Underwriting Consultants

Question of the Day – February 20

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Here’s the question of the day.

Question:  My client is receiving disability income benefits from the Social Security Administration.  How long will those benefits last?

Answer:  Social Security disability benefits are available to those with enough qualifying quarters of credit who are considered medically disabled.

The benefits under that program are available until full retirement age for qualifying taxpayers who are medically disabled.  Here’s an excerpt from the Social Security website:

When You Reach Full Retirement Age

If you are receiving Social Security disability benefits, your disability benefits automatically convert to retirement benefits, but the amount remains the same.

Those who are receiving Supplemental Security Income (SSI), a needs-based disability income program, will continue to receive benefits as long as they qualify both financially and medically.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day. 

Question of the Day – October 10

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Here’s the question of the day.

Question:  I have a client who is applying for Social Security retirement benefits on his own work record.  The client is divorced, and the client believes that his benefit would be higher based on his wife’s record.  The client is older than the ex-wife.  Is the client eligible to apply for benefits based on her record?

Answer:  Yes, if the ex-spouse is already old enough to qualify for retirement benefits.

Here’s what the Social Security Administration says about retirement benefits for an ex-spouse:

If you are divorced, your ex-spouse can receive benefits based on your record (even if you have remarried) if:

  • Your marriage lasted 10 years or longer;
  • Your ex-spouse is unmarried;
  • Your ex-spouse is age 62 or older;
  • The benefit that your ex-spouse is entitled to receive based on his or her own work is less than the benefit he or she would receive based on your work; and
  • You are entitled to Social Security retirement or disability benefits.

If you have not applied for retirement benefits, but can qualify for them, your ex-spouse can receive benefits on your record if you have been divorced for at least two years.

A divorced spouse is eligible to receive spousal Social Security retirement benefits based on the ex-spouse’s earnings record when the ex-spouse becomes eligible to receive benefits.

Here’s a web page from the Social Security Administration which describes the availability of the benefit and the method for applying:

http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/299/~/qualifying-for-divorced-spouse-benefits

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day. 

Question of the Day – September 6

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Here’s the question of the day.

Question:  My client is collecting pension benefits.  Are Social Security taxes collected from those payments?

Answer:  No.

According the Social Security Administration’s website:

You may have to pay income tax on pensions, annuities, interest or dividends, but you do not pay Social Security taxes. Those types of income are not on your Social Security record.

Social Security taxes do apply to employee contributions to a qualified plan—such as elective deferrals to a 401K plan.  However, they do not apply to employer contributions to most qualified plans.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day. 

Question of the Day – February 23

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The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question: My client and her minor children are receiving Social Security survivors’ benefits.  If my client has taxable income this year, will it make the survivors’ benefits taxable?

Answer: Yes, possibly.  Up to 85% of survivors’ benefits, like Social Security retirement benefits, are potentially income taxable.

If kids are entitled to survivors’ benefits under Social Security, the income is considered to be theirs.  Any tax result on the benefits will depend on their own other taxable income.  For most minor children, that means their survivor’s benefit will be tax free.

Likewise, a surviving spouse’s benefit under Social Security is potentially taxable depending on her own other taxable income.  If an unmarried surviving spouse adds up half her Social Security benefit plus other taxable income, if the result is greater than $25,000, then at least part of the survivor’s benefit will probably be income taxable.

IRS Publication 915 gives a worksheet to calculate how much of the benefit is taxable.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.

Question of the Day – February 1

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The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question: My client, who is retired and receiving Social Security benefits, is about to go to prison.  Will he still receive benefits while incarcerated?

Answer: No.  Social Security retirement benefits—and other Social Security monthly benefits—are suspended while the recipient is in prison.

Here’s what the Social Security Administration says:

If you are receiving Social Security, your benefits will be suspended if you are admitted for more than 30 continuous days to a jail or prison because you were convicted of a criminal offense. Your benefits can be reinstated starting with the month following the month you are released.

Although you cannot receive monthly Social Security benefits while you are confined, benefits to your spouse or children will continue as long as they remain eligible.

If you are receiving SSI, your payments are suspended while you are in prison. Your payments can be reinstated in the month you are released. However, if your confinement lasts for 12 consecutive months or longer, your eligibility for SSI benefits will terminate and you must file a new application for benefits.

Those who are about to be released from prison can apply for new benefits or reinstatement of benefits to begin upon their release.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.