Medicare & Social Security--Timing & Tax Issues

​We've described the Medicare Part B and Part D costs. And that they can be very significant for a single person and twice that for a couple. Essentially, over $500 and $1,000 per month respectively. That amounts to a large tax increase ("Adjustment" in government speak). Formal name: Income Related Adjustment Amount (IRMAA).
​
Causes and Remedies
  • The problem is "too much" income relative to your tax filing status. Income consisting most frequently of earned income, interest and capital gain income (sale of property, or a business, or equipment, etc.), royalties, Required Minimum Distributions--from IRA/401k accounts, and even Social Security income adding fuel to the Medicare premium fire;
  • Typically, there is a lookback period of 2 years prior to the present, to affect and calculate the current year's "adjustment". There do exist some "lifestyle" exceptions which may lessen the impact;
  • What these circumstances introduce is the necessity for someone with significant income to do some forward planning. The issues typically are interdependent. Rather like poking a balloon in one spot will necessarily cause it to bulge somewhere else (perhaps out of sight);
  • To minimize the adverse impact in the year wherein the problem begins, and in subsequent years, requires considerable understanding of the tax laws on different aspects of one's financial and investment planning, estate planning, and legacy planning.

This type of understanding and planning is an area we specialize in. The benefits of taking timely and smart actions can be very rewarding.

​We would be delighted to help sort through this with you, and leave you in a much better position. For your gain, and the gratitude of those you care about who follow you.
(314) 260-7917
St. Charles, MO 63303​
Click Here to Email Us