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#299498 - 03/12/17 03:37 PM Re: BluEXIT? A MODEST PROPOSAL FOR SEPARATING BLUE STATES FROM RED [Re: Greger]
TatumAH Offline
newbie

Registered: 02/18/11
Posts: 379
Loc: Upstate NY
Originally Posted By: Greger
We're about to sell my mothers house. Something just shy of $50K is about to be dumped into my meager bank account. I dread the tax bill and hope to salvage as much as possible by whatever means are available.


Will inheritance change my SS Disability payments?
Quote:

Will receiving an inheritance affect my disability benefits?

Posted May 28, 2015 | Categorized: Social Security Disability (SSD)

Workers who suffer a disabling injury that prevents them from working can be devastated with how their lives can change seemingly in the blink of an eye. In many cases, a person goes from being a self-sufficient, wage-earning member of the family to being unable to work and reliant on Social Security benefits.

Under these circumstances, it can be confusing to figure out what benefits are available and what you may be able to collect in financial support through disability benefits. For example, many people wonder if they will lose benefits or be denied if they receive money through an inheritance or other sudden influx of money.

Generally speaking, you will not lose Social Security disability benefits or have them decreased if you come into some money through an inheritance or other “financial windfall,” as noted in this article in AARP.


AARP
Quote:

Medicare/Disability Eligibility?

by Patricia Barry, AARP Bulletin, March 8, 2010|Comments: 3

Q. I am age 53, disabled and unable to work. Will I lose my Social Security disability benefits and Medicare if I come into some money through an inheritance?

A. No. If you suddenly become better off through an inheritance or a payoff from a lucky investment or any similar financial windfall, your Social Security disability insurance benefits (SSDI) will not be affected, nor will you lose your entitlement to Medicare.

Social Security officials say that only earnings from wages or self-employment income can reduce SSDI payments. Unearned income is not counted.

Even people on SSDI who are able to return to partial or full-time work usually continue to receive Medicare benefits. As long as their disabling condition still meets Social Security rules, they can keep Medicare coverage for at least 8.5 years after returning to work.

For more information, see Social Security’s “Questions and Answers on Extended Medicare Coverage for Working People With Disabilities.”

For more information on the Social Security Administration’s program for helping people with disabilities return to work, go online to “The Work Site.”

Patricia Barry is a senior editor at the AARP Bulletin.


Sorry to hear about all this, but there may be good news re the inheritance.
Tat
_________________________
There's nothing wrong with thinking
Except that it's lonesome work
sevil regit

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#299504 - 03/12/17 07:35 PM Re: BluEXIT? A MODEST PROPOSAL FOR SEPARATING BLUE STATES FROM RED [Re: pdx rick]
pondering_it_all Offline
old hand

Registered: 02/27/06
Posts: 6825
Loc: North San Diego County
Income is still taxable after retirement. People still work for wages, even if not for their usual full-time job. They still sell stocks, etc. to make capital gains. One trick is to do that slowly enough to keep your taxable income low, so you don't have to pay any taxes. You have to file to get back any money withheld.

All the money in deferred accounts like regular IRAs and 401Ks is taxable income when you take it out. As long as you leave it in, it grows without taxes. You do have to start taking it out starting at age 70, so you would run out of IRA money by the time you die. If you die early, you can leave whatever is left to anybody you like.

Money you put in Roth IRAs or Roth 401Ks has already been taxed and has no minimum distribution rules. Most of my nest egg is in a Roth IRA, so I have total control and no taxes, ever. I paid income tax when I rolled in into the account. Like a lot of income tax!

Tax-wise, my situation is pretty good. In my taxable account I have some gains, but I also have a lot of carry-over losses from a stock that went down but paid huge dividend over the years. So I don't think I will have to pay much in capital gains tax.

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#299505 - 03/12/17 07:46 PM Re: BluEXIT? A MODEST PROPOSAL FOR SEPARATING BLUE STATES FROM RED [Re: Greger]
pondering_it_all Offline
old hand

Registered: 02/27/06
Posts: 6825
Loc: North San Diego County
If your mother is still with us, she may get a special tax exemption for selling her house. So $0 federal income tax would be due. If she has passed, and that $50,000 is inheritance then you get a $5 million exemption on the federal estate tax. You will have to check on the state inheritance tax. In California it follows the feds more or less.

I think you will be pleasantly surprised. I finished my step-mothers estate last year and we paid less than $1000 in taxes. Inheritance doesn't count against income tax or disability like earned income. But do make sure you take those minimum distributions out of your tax deferred accounts: They really screw you with penalties if you don't.

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#299506 - 03/12/17 08:27 PM Re: BluEXIT? A MODEST PROPOSAL FOR SEPARATING BLUE STATES FROM RED [Re: pondering_it_all]
Greger Offline

Pooh-Bah

Registered: 11/24/06
Posts: 13772
Loc: Florida
That's pretty good news, I wasn't worried about losing my social security and medicare but I thought I might get hit with a pretty massive tax bill. Looks like maybe not so much.
_________________________
"Be yourself; everyone else is already taken."— Oscar Wilde

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#299508 - 03/12/17 08:45 PM Re: BluEXIT? A MODEST PROPOSAL FOR SEPARATING BLUE STATES FROM RED [Re: pondering_it_all]
TatumAH Offline
newbie

Registered: 02/18/11
Posts: 379
Loc: Upstate NY
Originally Posted By: pondering_it_all
Income is still taxable after retirement. People still work for wages, even if not for their usual full-time job. They still sell stocks, etc. to make capital gains. One trick is to do that slowly enough to keep your taxable income low, so you don't have to pay any taxes. You have to file to get back any money withheld.

All the money in deferred accounts like regular IRAs and 401Ks is taxable income when you take it out. As long as you leave it in, it grows without taxes. You do have to start taking it out starting at age 70, so you would run out of IRA money by the time you die. If you die early, you can leave whatever is left to anybody you like.

Money you put in Roth IRAs or Roth 401Ks has already been taxed and has no minimum distribution rules. Most of my nest egg is in a Roth IRA, so I have total control and no taxes, ever. I paid income tax when I rolled in into the account. Like a lot of income tax!

Tax-wise, my situation is pretty good. In my taxable account I have some gains, but I also have a lot of carry-over losses from a stock that went down but paid huge dividend over the years. So I don't think I will have to pay much in capital gains tax.


I took a different approach with the rationale that taking money out of IRAs after retirement would likely be taxed at a lower rate than while working. I figured that one worst case scenario would be that my investments appreciated to such a degree that the tax rate on the forced withdraws was actually higher than during working years. I can live with that enviable position. Another consideration would be a huge increase in tax rates (higher than in working years) to deal with the accelerating costs from baby-boomer entitlements. Time will tell on this one.

When I started this, inflation was very high and that discouraged saving in many boomers, and some never got out of the mind set. Spend it all before it becomes worthless! This, I think, helped to establish the habit of living beyond ones means, and failing to consider the long term situation.

Many institutions have deferred compensation plans, where you put aside money up front, that decreases your taxable income, and has the advantage that you never see the money, so you dont miss it, and it is automatic savings compounding over the years. This plan was less popular when I first started in it as it was called a SRP for salary reduction program, talk about poor marketing titling. The money went into various TIAA/CREF funds periodically re-balanced for various risks,large cap, small cap, international etc. This fund produced better long term gains, than the funds I tried to manipulate with my crystal ball. These funds have low fees, and you can move things around without fees. They did limit the number of transactions/month (to a reasonable number) as it appeared there were some obsessive/compulsives out there that were playing day trader.

This worked well for me but I was luckly to have a reasonable starting salary,
right after completing 26th grade!
Tat
_________________________
There's nothing wrong with thinking
Except that it's lonesome work
sevil regit

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#299510 - 03/12/17 08:56 PM Re: BluEXIT? A MODEST PROPOSAL FOR SEPARATING BLUE STATES FROM RED [Re: pondering_it_all]
Ken Condon Offline
enthusiast

Registered: 06/14/07
Posts: 3708
Loc: Eugene, OR
Quote:
But do make sure you take those minimum distributions out of your tax deferred accounts: They really screw you with penalties if you don’t.

It is my understanding that one does not need to start taking those minimum distributions from an IRA (non Roth) until 70 1/2 years of age.

Is this correct?
_________________________
Get your facts first, then you can distort them as you please.

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#299511 - 03/12/17 08:56 PM Re: BluEXIT? A MODEST PROPOSAL FOR SEPARATING BLUE STATES FROM RED [Re: Ken Condon]
Ken Condon Offline
enthusiast

Registered: 06/14/07
Posts: 3708
Loc: Eugene, OR
I think we have gotten a little off topic here. Should we start a new thread on this subject?
_________________________
Get your facts first, then you can distort them as you please.

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#299512 - 03/12/17 08:59 PM Re: BluEXIT? A MODEST PROPOSAL FOR SEPARATING BLUE STATES FROM RED [Re: Jeffery J. Haas]
NW Ponderer Offline
Moderator
Carpal Tunnel

Registered: 09/09/11
Posts: 15364
I hadn't looked at this thread until now. A couple of points. First: good job Tat. Exactly the advice I give. Second, 50k isn't enough of a gain to hit cap gains tax levels, or federal inheritance tax.
_________________________
A well reasoned argument is like a diamond: impervious to corruption and crystal clear - and infinitely rarer.

Here, as elsewhere, people are outraged at what feels like a rigged game -- an economy that won't respond, a democracy that won't listen, and a financial sector that holds all the cards. - Robert Reich

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#299513 - 03/12/17 09:20 PM Re: BluEXIT? A MODEST PROPOSAL FOR SEPARATING BLUE STATES FROM RED [Re: Jeffery J. Haas]
pondering_it_all Offline
old hand

Registered: 02/27/06
Posts: 6825
Loc: North San Diego County
I think there is a retirement thread all this stuff should be in. I just felt like my exit from the stock market had a particular timely political aspect.

I have ALWAYS tried to live below my means and my salary went way up when I switched from medical research to software engineering. So my retirement savings have always been maxed-out with every program available. Because I've done such a good job, I figured my retirement income will actually be higher than my salary while working. That's why I converted the IRAs and 401K to the Roth IRA some years ago. Then it did well with forever tax-free gains, unless Congress decides to screw us and tax Roth IRAs.

KEN: I think you may be right about 70.5 years. Look it up on the internet because the fines are horrible if you mess it up. I think some account trustees will actually track your age, calculate the minimum distribution, and send you a check automatically, but it is your responsibility to make sure.

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