If you have started receiving your Social Security benefits before the full retirement age and you are earning added income you need to watch out for Social Security cutoff amounts. This is only income that you are earning by working, whether it's full time or part time. Keep in mind, this only applies until you hit your full retirement age and then things change all together.
As of 2014, the annual earnings limit is $15,480. As long as you are making $15,480 or less, you are fine. If you are making over that amount, Social Security will deduct from the money they send you monthly. That calculates to Social Security taking back $1 for every $2 over the limit you are making.
How Does This Work:
This reduction will happen each year before you reach your full retirement age. The reduction applies to the income earned after you started collecting social security benefits. The number of months you worked before collecting social security will not be calculated into the annual earnings limit.
Earnings During the Year You Reach Full Retirement Age:
Until the exact month in which you reach full retirement age, Social Security will deduct $1 for every $3 you earn over the annual earnings limit. There is a different earnings limit that applies to the year of your full retirement age.
If your magic year is 2014, you may earn up to $41,400 during the year you reached full retirement age. Social Security will only count the earnings that you received before you reached retirement age.
Earnings After Full Retirement Age:
Once you have reached full retirement age, there is absolutely no limit to the amount of earnings you make. You may make as much as you wish without any reduction taking place in your social security benefits.
The Best Options for You:
Obviously, if you can wait until you reach full retirement age, this is best way to go. Unfortunately, many people cannot do that. Either they have been laid off, have medical issues that are making it tougher to continue working or just do not have the funds to tide them over.
If you do have savings or other retirement money to tide you over, you might be better off using this option.
Can I Stop Social Security Benefits?
If you started receiving benefits recently and wish to stop, you can withdraw your application within 12 months of starting the benefits before seeking early retirement.
What If I Am Collecting Unemployment?
Unemployment is not considered "earned wages: and therefore will not affect your benefit payments. If you are literally earning wages, income will be calculated when your benefits are paid. If you have further questions, visit the Social Security website and look into the benefits and how they affect you.
Turbo Tax provides you with taxcaster and step by step instructions to insure that you get every deduction and credit that you are eligible for. TurboTax insures that you get the largest refund possible. They even have a free tax refund calculator available that allows you to know the amount of money that you will be getting back in your tax refund.