Geez. My mother is driving me crazy.
Long story short is that my dad is going to start drawing down his social security benefits. He turned 65 last Spring but decided to wait til 2010 to draw. They go to the local SS office yesterday and my mom instructs the guy helping them to withhold 10% from my dad's checks in order to help save on their owed taxes at the end of the year (they make a TON of money via interest income).
My mother goes to work and talks to her co-workers about this. They tell her that she's crazy to tell the SS folks to withhold anything because all the SS income is non-taxable.
She calls me fussing at me! I wasn't even there with her nor did she ask me to research the issue beforehand or anything. She's even mad at me that the office is closed on Monday for MLK day. She wants me to email the guy to tell him to stop the 10% and thinks I can do this without having his email address (she's quite computer illiterate and doesn't understand the Internet, etc). I tell her that I will look into it and will call the office first thing on Tuesday.
I go off to have dinner with DH's side of the family. DH's sister's father-in-law was there - he's a retired CPA - so I asked him about the situation. He tells me that if half of my dad's distributions plus all his other income is greater than $32,000 for the year, then yes, the distributions are subject to taxes. I even verified this info on the IRS website when I got home just to make sure I heard what I thought I heard from him.
I tell my mother the news and she asks me why the federal government is taxing the distributions... like I know why the IRS and the federal government do what they do! Geez. She proceeds to tell me that I need to talk to her work friends so that they can explain it to her as I'm not doing a good job of it... I flat out say "NO". Why the heck do I need to explain anything to these people? My mother keeps telling me that I must be wrong because all her "friends" say that no taxes are supposed to taken against social security income.
Hello???!!! Let me put this in perspective. Nothing against factory workers, but my mom works in a small factory where hardly anyone makes even $20k a year. My mom and dad have always been savers so even though they may have "low on the totem pole" jobs, they have TONS of money in the bank - I'm talking around $40,000 in unearned interest income alone. Therefore, their situation is quite a bit different than their co-workers. I completely believe that her friends at work are speaking the truth as they know it because I doubt that they have family members drawing social security who have, with other income combined, to make the $32,000 threshold for married couples.
It drives me crazy that she would rather trust her co-workers who barely have high school diplomas instead of trusting her own daughter who graduated college with a finance degree and just got my MBA AND even a trusted CPA family friend (who used to do her taxes years ago before he retired by the way).
She kept telling about her friends' advice and lada lada lada... I was so frustrated that I finally just told her to get her friends to do her taxes for her as apparently I have no clue what I am doing (I usually do my parent's taxes). Well, that got her panties in a wad --- she's fuming mad at me now and ended our phone conversation telling me that she will take care of everything from now on and won't bother me anymore on anything (you know, trying to put on the big guilt).
I'm just done with it. If she won't listen to me, then why should I even bother? Am I wrong?
My mother; social security benefits, and taxes = UGH ->warning long vent!
January 17th, 2010 at 04:36 am
January 17th, 2010 at 05:01 am 1263704513
January 17th, 2010 at 06:31 am 1263709867
January 17th, 2010 at 04:00 pm 1263744010
For the record, my dad makes six figures, is very intelligent, does his own taxes, and had no idea social security was taxed. I call it "the best kept secret." PEople always look at me like I have a third eye when I say that these days, people tend to be in higher tax brackets in retirement. This is PRECISELY why. But no one but a tax expert would even know the tax ramifications of social security, for the most part. It's a "not indexed for inflation" thing, which makes it somewhat of a hidden tax. It's always been there, (since the 80s? anyway) but no one finds out about it until they retire - and it's worse now than it was before with the inflation thing.
Anyway, considering my dad's reaction when I told him, she's have the same reaction if she talked to a bunch of CEOs. Which is why you don't get tax advice from random people!
January 17th, 2010 at 04:53 pm 1263747231
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January 17th, 2010 at 05:40 pm 1263750007
Or just let her figure it out. I don't think people should ask for others' opinions/advice, only to reject it and carry on when it's not the answer one's looking for.