By Elliot Raphaelson
From Tribune Content Agency
Question: I was divorced many years ago after more than a 10-year marriage. I have not re-married. My previous wife has passed away, and she worked under Social Security for many years. I am 63 now, and don’t plan on filing for my Social Security benefit until I reach my full retirement age. Am I eligible for a survivor benefit? And if I do apply for it now, will that decrease the Social Security benefit I will be eligible for at full retirement?
Answer: Fortunately, as I have indicated in past columns, a survivor benefit is independent from the Social Security benefit you are entitled to based on your work record.
This means that if you apply for and receive a survivor benefit based on your previous marriage, it will not impact your Social Security benefit when you apply for it at your full retirement age (FRA).
You can receive a survivor benefit after you reach age 60. The benefit is pro-rated based on your age when you apply. The maximum survivor benefit is available if you apply at your FRA. Applied for at age 60, the survivor benefit would be 71.5 percent of the benefit if applied for at FRA. Between age 60 and FRA, the benefit is prorated.
You can apply for survivor benefit now, and it will not have any negative impact on your Social Security benefit at FRA. Even after you reach FRA, you can delay applying for your Social Security benefit, while you continue to receive survivor benefit, as this would increase your Social Security benefit amount by 8 percent per year up to age 70.
Bottom line: There is no reason why you should not apply for a survivor benefit now There is no downside in doing so.
Question: I inherited an Individual Retirement Account (IRA) from my father in 2021. He was taking required minimum distributions (RMDs) because he was 77 at the time of his death. I understand that, based on recent IRS guidance, I am required to take RMDs in 2023, and in subsequent years up to 10 years after my father died, in order to avoid any penalty. I also understand that, because the IRS did not issue guidance until this year, I will not have any penalty for not taking an RMD in 2022. However, I don’t know if I am required to take an additional RMD that I would have taken out this year in 2023.
Answer: The IRS has only indicated in its guidance in 2022-23 that any RMDs that should have been taken by those who were recipients of IRAs in 2021 and 2023 are not subject to any penalty. The IRS has not specified whether the RMDs that should have been taken in 2021 and 2022 has to be taken out. The IRS has only indicated that starting in 2023, RMDs have to be taken out each year in order to avoid any penalty, and by the end of the 10th year after the death of the IRA owner, all the funds in the IRA have to be withdrawn.
Question: I won several thousand dollars in a lottery this year. How will this impact my income taxes this year? Will it impact my Medicare costs? Will my Social Security taxes be impacted?
Answer: If you received lottery winnings in 2022, then you will have to report the income on your 2022 tax return next year. It may also impact the Medicare premiums you pay in the future. Medicare premiums are based on a gap of two years. So, in 2024, you may incur a higher Medicare premium based on your total income level in 2022. Your Social Security income should not change as a result of your lottery winnings. But the tax liability on your Social Security income may be higher based on the total income of categories used to determine what percentage of Social Security income is taxable. The rate will be no higher than 85 percent of the total Social Security income you receive.
(Elliot Raphaelson welcomes your questions and comments at [email protected].)
©2022 Elliot Raphaelson. Distributed by Tribune Content Agency, LLC.
The Epoch Times Copyright © 2022 The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
