Any tax specialists here?

[Kindigger]

I am doing a part time job which my Dad signed the W-9 for. My parents are retired. Mom works PT, and Dad gets something from a retirement pension, plus SS. They need to stay under $36,000 yr. to not owe taxes, and continue to get full refunds of taxes paid.

I'm considering adding another job which MAY take them close or slightly over the $36,000. The total amount per year for both jobs would be $2,500.

Ballpark estimate...how much tax would $2,500 cause them to owe if they go over? If I were to give them $20 (or ?) per month, would that more than enough cover what they would owe if they went over by the full $2,500?

Any help would be greatly appreciated!

[A HERETIC I AM]

1. I'm no tax specialist but check out this link from irs.gov

http://www.irs.gov/publications/p915/ar02.html#d0e341

<snip> "To find out whether any of your benefits may be taxable, compare the base amount (explained later) for your filing status with the total of:

One-half of your benefits, plus

All your other income, including tax-exempt interest.


When making this comparison, do not reduce your other income by any exclusions for:

Interest from qualified U.S. savings bonds,

Employer-provided adoption benefits,

Foreign earned income or foreign housing, or

Income earned by bona fide residents of American Samoa or Puerto Rico."<snip>

Essentially, if the total of one-half of his SS Benefits PLUS all other income is more than $34,000 then his SS benefits become taxable. If your parents file jointly the figure is $44,000


I am unsure what you meant by this statement;
"I am doing a part time job which my Dad signed the W-9 for"
Does that mean you are employing him? Or is he employing you?

The bottom line is simply this....go to http://www.irs.gov/pub/irs-pdf/i1040a.pdf and head to the tax tables section. You would need to figure their AGI and simply look at how much of a difference $2500 makes.

If your dad files singly, and his AGI would be $34,000 the difference would be about $600. ($5064 vs $5689 in taxes)
If your parents file jointly the difference would be about $380 ($4349 vs. $4729)
The above was found on that link i gave you - 2006 1040 instructions, comparing an AGI of $34,000 to an AGI of $36,500.



Hope that helps

[Kindigger]

2. Thank you :)

I think the first part of your post explains what he finally figured out today- he can make $11,000 per year without it affecting his SS so every thing's okay.

As to your question about the W-9...I can't answer that. Agent Mike might be watching. :yoiks:

[A HERETIC I AM]

3. That damned Agent Mike....spoils all the fun!

You're welcome...glad to help. The IRS website is actually pretty easy to navigate and if you are willing to take the time to read (It is often boring as watching paint dry, but there you go) you can usually find the answer you are looking for.

I am in the business of investing/retirement planning etc. so PM me if you would care to. I would be able to answer more specific questions personally than i can on a public message board.

Paul