I talked to two different advisors at Social Security and they both assured me that gambling income, regardless of whether it was reported on front page or Sch C did not effect Social Security.
Has anyone experienced a difference on Medicare?
Medicare and W-2Gs
Are you asking the right question? Once you begin getting Medicare at age 65 you will be affected.
Due to our W2-g's we both have an additional $104.90 deducted from our social security benefit for Part B. My wife also has Part D prescription drug coverage and has an additional $31.80 deducted from her benefit payment each month.
Total extra cost for those W2-gs per month is $136.70 or $1640.40 annually for the wife. Combined we lose $2899.20 income per year. Perhaps call social security back and explain to them what I just told you.
[Non-text portions of this message have been removed]
It is my understanding that one's monthly Social Security check is affected because of the Medicare premium that is deducted.
That is, your Social Security amount in unaffected by your MAGI. But the check amount is reduced because of the Medicare premium deduction. And, your Medicare premium is affected by your MAGI.
This may sound convoluted. But, in reality, your Social Security check is made of of two parts: 1) the social security amount; 2) the Medicare deduction.
..... bl
[Non-text portions of this message have been removed]
Born loser is basically correct. Your Social Security benefit is a separate entity from your Medicare benefit. You can pay for Medicare with a check from your bank, but most people find it convenient to have it deducted from their SS benefit. If you file a Sched C for gambling then it could affect your SS benefit just like any other self-employment income or wages.
Chris
[Non-text portions of this message have been removed]
And just one point of clarity: the impact isn't limited to age 65. Gambling income impacts the medicare deduction at whatever age you opt into the program.
Unfortunately, we were ignorant of this impact until it was too late. When my husband began to draw benefits at age 62, HIS medicare deduction was set at the maximum, despite zero income. Even though he doesn't gamble at all, we file jointly so my total AGI impacted his benefit costs.
After multiple calls to the SSA, he was told that this was based on the two prior years of our joint income, and they will recalculate this every year. Once we understood the limits, we realized that as long as I am working, he will be paying the maximum for his medicare.
But my lesson learned is that as I get close to retirement, I will need to reduce my play considerably to avoid having both of our medicare payments maxed out.
The original warning was a good one, and I appreciate the reminder!
[Non-text portions of this message have been removed]
Nita,
You cannot opt into Medicare before age 65. You can only get Medicare before age 65 if you qualify for disability benefits. If your husband is receiving disability benefits and is paying the highest extra premium of $230.80 per month you may be better off filing separately. Your husband's benefits may be partially taxable when added to your income. Filing on his own he may owe no taxes on his SS benefits and save $230.80 a month on Medicare. Tax preparers are not usually aware of the possible savings, $2,769.60 per year, in Medicare premiums.
[Non-text portions of this message have been removed]
" When my husband began to draw benefits at age 62, HIS medicare deduction was set at the maximum, despite zero income." I don't believe Medicare kicks in 'til one turns 65. So, he shouldn't have started paying a Part B premium just because he chose to start drawing SS at 62.
[Non-text portions of this message have been removed]
You guys are right - thanks for jogging my memory.
He took SS at 62, then got the shock when medicare kicked in at 65. We discussed the option of filing separately, but he is paranoid that after 37 years of joint returns, it would raise eyebrows at the IRS. I'd be interested to hear if others have made this switch, and whether it caused issues.
[Non-text portions of this message have been removed]
Remember if filing separately but living together all year will make 100% of social security benefits taxable so do the math all the way to make sure.
Ernie Mayhorn, EA
[Non-text portions of this message have been removed]