European Stars and Stripes (Newspaper) - October 13, 1990, Darmstadt, Hesse                                By Rebecca Godkin associated press every two weeks for 40 years there it was on your paycheck a the deduction for fica taxes. Fica or social Security was going to be a vital part of your retirement plan. Now that retirement time has come you discover the monthly social Security Check is not nearly enough to cover your expenses. To supplement the deficit you decide to get a Job. Beware you May be jeopardizing the tax exempt status of your social Security payments or in certain cases continued availability of the payments themselves. The effect of the extra income on social Security payments can be difficult to determine because of complicated rules governing the subject. To begin with the general Rule provides that social Security payments Are not subject to taxation. If however the sum of an individuals Quot modified adjusted Gross income Quot plus one half of the social Security benefits received during the year exceeds a specified base amount a portion of the benefits becomes taxable. Modified adjusted Gross income is a taxpayers adjusted Gross income As reported on form 1040 calculated without regard to social Security payments receive increased by any tax exempt interest received by the taxpayer during the year. The base amount above which income can be taxable is $25,000 for individuals filing As single head of household or qualifying widow $32,000 for married individuals filing separately. The portion of social Security benefits a Retiree will be required to include in income is equal to half the excess just described up to a maximum of half the social Security benefits received. For example during 1990, Lisa Devereaux single age 62, received $9,000 in social Security benefits and $5,000 in tax exempt interest. To supplement this income Lisa worked part time earning $20,000. Adjusted Gross income $20,000 plus tax exempt interest $5,000 plus half the social Security Benefit modified adjusted Gross income $29,500retiree earning scan jeopardize social Security benefits less the base amount for single taxpayers $25,000 excess income Over base amount $4,500 half the excess not to exceed half the social Security Benefit now considered taxable income $2,250 perhaps the most devastating consequence to working retirees is the possibility that their social Security payments will be reduced because thay earn Quot too  this provision applies Only to individuals under 70. Social Security recipients under 65 can earn up to $6,840 in 1990 without having their benefits reduced those Ages 65 to 69 can earn up to $9,360. For every $3 earned that exceeds those threshold amounts the individual s social Security Benefit is reduced by $1. For purposes of this provision earnings Are defined As wages received by an employee and or net earnings from self employment. To illustrate consider Tom Robinson age 62. During 1990, Tom received social Security benefits of $12,000. Tom also worked As a tax preparer earning $18,000. Earnings $18,000 less earnings threshold $6,840 earnings in excess of threshold $1,160 social Security Benefit reduction 1 �?3 $3,720 net social Security Benefit $8,280 $12,000-$3,720 lastly although it May not seem to make much sense a Retiree s work related earnings Are subject to the social Security tax even though he or she already May be receiving social Security benefits. For 1990, the social Security tax is applied at a rate of 7.65 percent to a maximum wage base of $51,300. For Tom in the example above this would result in an additional tax expense of $1,377. This coupled with the aforementioned provisions certainly does not provide much incentive to social Security recipients wishing to work for financial reasons. Rebecca Godkin is an academic assistant in the tax planning division of the College for financial planning in Denver Colo. Not a retirees work related earnings Are subject to social Security tax even though he or she already May be getting social Security benefits. 0 us of o h <0 o o m o us q. E h it q z it o cd s o stars and stripes bookstores stars and stripes bookstores the Sears wish Book gives you four Holiday Cata logs in one the Sears wish Book combines their gifts style toys and Home Cata logs to give you Holiday shopping made easy totalling Over 700 pages the Sears wish Book is your ticket to special gifts at terrific prices. Plus order from the Sears wish Book through october 22, 1990 and you la receive their Early shoppers Bonus and can get up to $20 off your next Catalon order beat the Christmas shopping Rush with the Sears wish Book. Available for $3 at a stars and stripes Bookstore near you. Stars and stripes bookstores stars and stripes bookstores saturday october 13, 1990 the stars and stripes a a a Page 17