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Repaying Social Security might be a great financial move
If you started taking Social Security before age 70, and are currently within a few years of age 70, you may benefit from taking advantage of a little-known provision in Social Security. By filing Form 521 with your local Social Security office, you can withdraw your previous application and later re-apply to start receiving benefits at the higher rate you're now eligible to receive. You will have to repay the benefits you've already received, but the repayment does not require you pay interest or any inflation adjustment for the benefits you already received. In fact, when you repay the benefits, you can claim a tax credit for the tax you previously paid on those benefits, or a deduction for the amount you repay, whichever is more advantageous.
(Visit the repayment calculator.)
There are a number of reputable publications that have recently published articles on this topic (see here, here, and here, for examples). Of course, there is a risk if you choose to repay. It's possible you might die before collecting the value of benefits you repaid. But generally, if you're age 66 to 73, in good health, and have enough liquid assets to repay the SS benefits you've already received, this option can result in a significant increase in your monthly income. When compared to the identical annuity product (an inflation-adjusted lifetime annuity), the Social Security option typically generates 25-50% higher returns for individuals who are 70 years old. For a detailed example, see the Class 5 Tax blog.
(Visit the repayment calculator.)
If you want to find out how this option can benefit you specifically, please see our Social Security Repayment Calculator which will calculate the approximate amount you would have to repay and what your new monthly payment will be. Then compare the results to a comparable 3% lifetime annuity at newretirement.com (or any other source where you can get annuity quotes) to see how the Social Security repayment option compares. If you want to file Form 521 to withdraw and re-apply for benefits, Class 5 Tax offers service at a single flat rate of $521 to advise you of the tax benefits and consequences of your decision, provide advice to make the process smoother, prepare your current year tax return claiming a deduction or credit for the repayment of benefits, and examine up to 9 years of prior returns to determine the amount of credit or deduction you can claim for repaying benefits. Alternately, you can simply engage us for advice at our normal hourly rate of $90 for as much or as little advice as you need.Request Service now!
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