Tax return question - residency?

[MAMalody]

You might want to check Publication 915 free at www.irs.gov for an alternate way to be taxed on multiple year SSA payouts. It could be to your benefit.

[dsprik]

Thanks a ton for that info, Phil and Mike. Will they offer me a withholding option before they distribute any back benefits? They also claim that my WC will be coordinated with any back benefits. One person going so far as to say that I might not receive any back benefits since I have been receiving WC all this time.

I have a publication that states that my SSDI benefits plus WC cannot exceed 80% of my what my income was at the time of injury. Hopefully, this means that I can at least get that difference between that 80% and what I am getting now for WC over the past year and a half. We'll see.

[exav8tr]

Dave, I wasn't given any option as to tax withholding. They did pay my lawyer out of the proceeds but I still have to claim that amount. Did not have WC so can't address that ? Good luck though!!

[dsprik]

Phil, I am using a union supplied representative, so I will not have to pay for an attorney. However, my very first question that comes across my mind is if you are liable for the amount paid to your attorneys, does this mean that they DON'T have to pay taxes on this income???

[DonandBonnie]

Ohio is now attempting to complicate this issue. Currently if you reside in Ohio for more than six months out of the year, you are considered a resident and must pay state taxes for the year. If you reside outside the state for more than six months, you pay no state tax. Ohio feels cheated that many snow birds live outside the state for six months and one day in order to avoid state taxes. So now they have drafted legislation to eliminate the six month residency requirement so that they can collect taxes on any period of time that you spend in the state. One day, one week or one month, it doesn't matter. Ohio wants your money.

[dsprik]

I think that is typical of govt, and it is too bad. Ohio (and Mich, NY, etc) is already losing residents (I believe?). Why would you try to beat up the remaining residents and try to "punish" them instead of trying to come up with a "carrot" to encourage some sort of benefit(s) for actually having the title of "Ohio resident"???

I know the economics of the Midwest are not good right now, but someone needs to become a little more creative in a positive way, instead of levying even more crushing taxes/conditions on the remaining population. Doesn't make sense to me. But then again, I'm not in government...

[SKOOBDO]

...it's what you call voluntary compliance. The only way they will know you're visiting here is by checking with every Hotel, Motel, Campground, Resort, Family's homes, etc in the entire State, and unless they have a court order (which they've done before), I don't think that's going to happen. It's voluntary compliance, as is almost all tax reporting. I don't know anyone that has reported every penny they made for every job they've held or from every source of money they received.....hmmmm. my 2cents

[exav8tr]

Dave, I don't know what the attorneys will have to pay (don't really care either). I know I just received a 1099R from SSA and it lists the attorneys fees as benefits in block 3, Benefits for 2006 and again in Block 5, Net Benefits for 2006. What the Govt giveth, the Govt takeith away.........

[FulltimeFollies]

When you recieve your ssdi payment, they will not take any taxes from it, and you will not get a option. You will get a 1099 every year and its up to you to pay and report the income. I have never heard of reducing your back benefits, unless you exceed the maximum that you can make on ssdi, which I believe is still 640 dollars a month. If you draw that much or more on w/c, you will not draw any benefits from ssdi. So I guess if you did , you will not receive any back benefits or future benefits until your w.c. stops.

[dsprik]

I'm not sure, John. It would be great if you are right. I was told that because I am on WC of $542/wk, that any SSDI back benefits (from June 2005) would be coordinated with this amount and thereby reducing my monthly back benefit by this amount. That person when I told him of my WC payments, said that in that case I would probably get NO back benefits at all. That was depressing.

As I mentioned earlier. A SS case worker emailed me a excerpt from their documents that says that SSDI plus my WC cannot exceed 80% of my last teaching income. If that were the case, I figured the following scenario:

My last year teaching equaled $51,000 (according to the Michigan State Office Retirement Services), which divides out to $4,250/mo. 80% of this is $3,400. Using the WC of $542/wk x 52 wks = $28,184/yr. Then divided by 12 months = $2,349/mo.

$3,400 minus $2,349 = $1,051/mo that should be allowed to accrue after coordinating with the $2,349 of WC.

The first 5 months after application are a wash - some sort of waiting period that you can't count for accrual... That would make my starting date for accrual 11/2005 (6/2005 plus 5 months). If my case is approved at the end of March 2007, that would be 17 months (did I count right?) of accrual which would be 17 x $1,051 = $17,867.

If there is NO coordination of back benefits with WC, then I would get approx $30K.

This is my "hypothetical" thinking on this. Everyone please feel free to throw darts at this. I have no idea if this is how SS will actually aproach this accrual...

[exav8tr]

Dave, I can make up to $800.00 a month before my SSDI is reduced dollar for dollar. I do not know how SSA looks at WC. If that is considered reportable income then I would assume it applie just like the $800.00 a month. You might check with your SSDI Case worker or your union rep. I would not want to steer you wrong. I received 3 1/3 years worth of SSDI in 2006. I will pay the pauper soon......Fortunately I held back about a third for taxes. Doesn't seem fair they tax you on disability.

[FulltimeFollies]

The reason I say what I say, is that I wanted to work part time while drawing my ssdi. I am capable of working 2-4 hours 3-4 days a week. I called ss and asked, "If I go to work, how much can I make and still draw my ssdi?" There answer was 640.00 per month, regardless of how I made it. I too was on w/c for 6 months before applying for ssdi, my start date on ssdi was effective the day I started on w.c. I received nothing for those six months, as ss said I made too much money to draw ssdi. This was just my case, I hope yours works out like you hope.

[dsprik]

Phil, I think they told me something like $860/mo. We will definitely have to set up an account to hold some back. I would be thinking 30%?

[dsprik]

John, if I understand you right, what you are saying is that because you were in WC, you made too much for SSDI to consider you eligible for back benefits those months you were on WC?

Thats what I'm afraid will happen to me.

Is each state different on that coordination between WC and SSDI?

[FulltimeFollies]

SSDI is not a state function , unforunately. Yes , you are correct, they said I made too much on w.c. and in additon, the 6 month waiting period would void it anyway.
Strange, they dont give you a 6 month waiting period to pay it once you start to work, do they? But, then again , they make the rules and we march to their drums.

[dsprik]

I am not returning to work. I will be retiring on SSDI and my Teacher Disability when my SSDI is approved. My last day of work was June 2005 (end of school year). I did not return in the fall and began to use up my accumulated sick days. Ran out of them the middle of Nov 2005. It was at that time that my WC kicked in.

I have been on WC for 15 months now, and I will continue until I can officially retire on disability. My 6 months (or 5, whatever it is) waiting period was from June 2005 to Nov 2005. I am looking into settling with WC for a lump sum. I do not have any ongoing medical expenses nor any upcoming medical procedures that I will have to worry about.

Any lump sum will be taken into account by SS. They will take the current US male actuarial table for expected lifespan, then divide the lump sum received from WC up by the number of months from my current age to that expected average lifespan - think that's at 75 right now, not sure. I am 54, so that 21 years or 252 months. If, for example, the lump sum = $100K, then SSDI will reduce their payment by ~ $400/mo.

This is what I have been told.

[pilk]

We were really interested in this topic & glad to find this discussion. We are Illinois residents. We plan to retire in October 2007 and head to Florida while keeping a homebase in the midwest. Illinois does not tax pensions. We are interested in looking at a home in Iowa, but have no desire to subject ourselves to Iowa's practice of taxing pension income nor their high vehicle registration fees. As we plan on being in Florida over six months annually, we are wondering about changing our residency status to Florida. We would love to hear any advice folks would like to share.

Bob & Connie

[dsprik]

Bob, I'm not sure about FL for residency. I haven't heard of anyone promoting FL as a desired residency option for fulltimers. What kind of a "home base" are you thinking of? A permanent house? Sounds like you will be fulltiming? If so, something like a South Dakota residency might work real well for your situation - Iowa is not that far from SD. There are other states, also, though. Others here can give much better advice than me...

[pilk]

We have a daughter in the Pensacola area - she tells us there is no state tax there and vehicle registration is very economical. Our plan is to spend 4-5 months in the midwest & the remaining months in the warmth. We have kids & grandkids in Iowa, Ohio & California. Thanks for your input - hope we get some more posts.

[patodonn]

FL is not too bad for residency. Here is a link for comparisons..

http://www.myprimeyears.com/rv/yeaw_..._resources.htm

FL does have a couple of taxes...check closely to see how they impact your individual situations. For our purposes, SD is a clear "winner".