Does the buyout count as earned income for social security purposes? So when i get my SS statement that shows how much i earned every year of my life, will it show the buyout for 2019 or $0 if I don't work anywhere else?
I Was wondering the same thing. Good question @W6MQY0b-1lfi
It's earned income. Good luck on your taxes, too. Depending on how big the payout is, it might bump you up to another tax bracket.
If social security taxes are taken out of anything, I'm pretty sure that that amount (up to the cap) will appear on your earning record. Why wouldn't it.
Some of you are misunderstanding the question. It's not about if SS tax will be taken out, of course it will. It's about if the buyout dollars counts as wages which counts towards your SS earnings estimate for when you start collecting SS. But I'm pretty sure this will not count as wages now.
oh yes it IS income. Are you kidding me ? if you earn above 118k in a year or somewhere around that (including the payout) anything above that will not have SS taken out. Be careful you don't get that payment this year. And yes, most states will not pay you unemployment for the period you are receiving the buyout. (they estimate the number of weeks your payment would have in equivalent paychecks)
@jmy It's not that you can't but unless it's a Roth, you'd be taxed twice on that money.
This is an interesting question. I heard one couldn’t do an IRA with severance dollars since it unearned income.
Yes
What is special payment? Anyone way you slice it, it is income and the taxing authorities will be knocking at tour door if you believe otherwise.
I think Special payments take out SS, etc.
Up until the max,
You may be able to get a refund of SS at the end of the year.
It counts as earned income for SS as SS will be taken out for tax purposes.
I don't think the buy out counts. I think it's considered a "special" payment and not earned income