Retirement Benefits The Basics

How do I report the death of a beneficiary?

You can report the death to a service representative by calling toll free, 1-800-772-1213 (for the deaf or hard of hearing, call our TTY number, 1-800-325-0778), from 7 a.m. to 7 p.m., Monday through Friday.

Whenever you call, have the deceased person's Social Security number handy. To report the death of a beneficiary, you should:

Notify the bank or other financial institution of the beneficiary's death.

Request that the bank or other financial institution return any funds received for the month of death and later to Social Security as soon as possible.

Return checks to Social Security as soon as possible. DO NOT CASH any checks received for the month in which the beneficiary died or thereafter. For example, if the person dies in July, you must return the benefit paid in August.

A one-time payment of $255 can be paid to the surviving spouse if he or she was living with the deceased; or, if living apart, was receiving certain Social Security benefits on the deceased's record.

If there is no surviving spouse, the payment is made to a child who is eligible for benefits on the deceased's record in the month of death.

Some of the deceased's family members may be able to receive Social Security benefits if the deceased person worked long enough under Social Security to qualify for benefits.

You should get in touch with your local Social Security office as soon as you can to make sure the family receives all of the benefits to which they may be entitled.

My mother is disabled and I need to stay home to help care for her. Does Social Security provide benefits to a caregiver or housekeeper?

No. There is no provision in the Social Security Act to provide benefits for caregivers of the aged or disabled. However, you may want to contact your local Social Services or Welfare department to determine if there are any locally sponsored programs that might provide you with assistance. They may also be able to provide you with the names of organizations that might help.

My neighbor, who is retired, told me that the income he receives from his part-time job at the local nursery gives him an increase in his Social Security benefits. Is that right?

People who return to work after they start receiving benefits may be able to receive a higher benefit based on those earnings. This is because Social Security automatically recomputes the benefit amount after the additional earnings are credited to the individual's earnings record.

Someone told me that Social Security has a financial planning service. What is the connection between financial planning and Social Security?

Does Social Security have a Retirement Planner?

Social Security is not in the financial planning business. However, it provides a personal financial planning tool to millions of workers who are paying into Social Security.

Each year, workers who are age 25 or older and not already receiving benefits based on their own earnings record, will receive a Social Security Statement about three months before their birthday.

The Statement lists the worker's earnings and the amounts of Social Security taxes he or she has paid over the years and provides estimates of the Social Security benefits the worker (and dependent family members) may be eligible to receive now and in the future. The Statement is intended to help workers plan for their financial future.

The Statement doesn't list earnings for any work that is not covered by Social Security, such as some government jobs, because that information is not reported to Social Security.

Social Security's online retirement planner will let individuals compute estimates of their future Social Security retirement benefits online. It also provides important information on factors affecting retirement benefits, such as military service, household earnings and federal employment.

You can access the SSA's Retirement Planner on our website.

What month do retirement benefits begin?

A person who meets all requirements for entitlement can receive reduced benefits beginning with the first full month that he/she is age 62.

Thus, benefits are not paid for the month a person reaches age 62 unless his or her birthday is on the first or second day of the month. (Under a common law rule, a person reaches a given age on the day before his or her birthday.)

Social Security benefits are paid in the month following the month for which they are due. For example, if your 62nd birthday is July 15, your first month of entitlement is August, and you would receive your first check in September.

The trustees, issuing a once-a-year analysis of the government's two biggest benefit programs, said the resources in the Social Security trust fund will be depleted by 2041.

The reserves in the Medicare trust fund that pays hospital benefits were projected to be wiped out by 2019.

Both those dates were the same as in last year's report. But the trustees warned that financial pressures will begin much sooner when the programs begin paying out more in benefits each year than they collect in payroll taxes.

For Medicare, that threshhold is projected to be reached this year and for Social Security it is projected to occur in 2017.

Even this warning doesn't go far enough.

The so-called trust fund is a fund that has nothing but IOU's. It is paper that has replaced the money congress has stolen from the social security yearly excess revenues. Congress has spent the money on pork barrel projects among other horrors.

I am 65 and my wife is 62 and receiving spouse's benefits. When does she qualify for Medicare benefits?

Most people must wait until age 65 to qualify for Medicare benefits. Some people can get Medicare at any age. This includes people who:

Have been getting Social Security disability benefits for 24 months;

Have kidney failure and require dialysis;

Have had a kidney transplant; or

Receive disability benefits because they suffer from amyotrophic lateral sclerosis (also known as Lou Gehrig's disease).

How do I obtain a Proof of Income Letter, also know as an Award Letter?

Some people who get Social Security or Supplemental Security Income Benefits require a statement of their benefit amount or other information to show to another agency to obtain services or other benefits. The Proof of Income Letter can be used for this purpose and can be obtained on the Internet at Request a Proof of Income Letter.

The letter will be mailed to the address we have on your record. You can also call our toll-free number, 1-800-772-1213, and one of our representatives will be glad to mail one out to you. People who are deaf or hard of hearing may call our "TTY" number, 1-800-325-0778, between 7 a.m. and 7 p.m. on business days.

If you prefer, you can visit your local Social Security office to obtain the Proof of Income Letter. The address and directions to your local office can be found on the Internet.

Issue Number: IR-2008-037

Inside This Issue

Special Economic Stimulus Payment Packages Go to Social Security, Veterans Recipients

WASHINGTON — Starting [this] week, the Internal Revenue Service will mail special information packages to 20.5 million recipients of Social Security or Veterans Affairs benefits to help them get their 2008 economic stimulus payment.

The 10-page tax package contains everything the recipients will need to file a 2007 tax form immediately. Each package contains an informational notice, tips for completing Form 1040A, a sample Form 1040A and an actual Form 1040A for the filer to complete.

The package is specially designed for people who may qualify for an economic stimulus payment but who normally aren’t required to file a tax return.

“We want to put everything right at the fingertips of the people who need this information the most,” said Linda E. Stiff, Acting IRS Commissioner. “In some cases, seniors and others in this group haven’t needed to file a tax return for years or even decades. To help them get a stimulus payment, we’re doing everything we can to make this as easy as possible. These packages mean many people will just need a pen and a stamp, and the IRS will do the rest.”

Under the Economic Stimulus Act of 2008, people may be eligible for the minimum payment of $300 ($600 for married couples) even if they do not normally file a tax return. There also is an additional payment of $300 for people with eligible children younger than 17. However, people must file an income tax return in order to receive the payment.

People who don’t normally need to file also can use Free File – Economic Stimulus Payment, which is available at IRS.gov. Several Free File software providers are making their products available for the simplified filing of a tax return.

“These stimulus payments have the potential to help people in real need and stimulate our economy,” said Tom Nelson, AARP’s Chief Operating Officer. “The IRS, through efforts like this, is doing a great job of informing people that they might be eligible for a stimulus payment, offering step-by-step guidance on how they can apply, and what scams they need to avoid.”

To qualify for the minimum economic stimulus payment, people must have at least $3,000 in any combination of qualifying income from retirement, disability or survivors’ benefits from the Social Security Administration; disability compensation, disability pension or survivors’ benefits from the Department of Veterans Affairs; Tier 1 benefits from Railroad Retirement, certain combat pay and earned income from wages, salaries, tips or net earnings from self-employment that are includible in taxable income.

The mailing list of 20.5 million names represents Social Security and Veterans Affairs benefit recipients who did not file a tax return in 2006, allowing the IRS to directly target the special package to people likely to qualify for a stimulus payment but who may not otherwise file a tax return this year. The mailing, called Package 1040A-3, is separate from more than 130 million other economic stimulus letters (Notice 1377) being sent this month to taxpayers who filed tax returns in 2006.

Generally, the special mailing does not include low-wage workers without a filing requirement who could qualify for economic stimulus payments. The IRS is working with numerous community, governmental organizations and charitable groups to reach low-income workers and their families. People in this category also need to fill out a tax form, preferably a simple Form 1040A.

With so many people potentially unaware of the stimulus payments, Stiff encouraged people to reach out to help their friends and family members. “We don’t want anyone to fall through the cracks,” Stiff said. “People can help friends and family members by making them aware of the payments or helping fill out the forms. These forms are very simple. In just a few minutes you can complete the entire process by filling in just a few lines.”

A sample Form 1040A is included in the tax package and is available at IRS.gov. People need to complete the lines for the mailing label and provide a Social Security number; the filing status (single or married) and exemptions (children younger than 17 and their Social Security numbers).

People with earned income must complete Line 7 to report their 2007 annual income. Recipients of Social Security, VA and Railroad Retirement payments must complete Line 14a of Form 1040A to report their 2007 annual benefits. Certain recipients should have a Form SSA-1099 or Form RRB-1099 with that information. Or, people can multiply their 2007 monthly benefit by the number of months the payment was received for 2007 to estimate their annual benefit amount.

The IRS encourages recipients to complete the direct deposit information on the Form 1040A if they have bank accounts. Direct deposit will be the easiest and fastest way to receive a payment. The IRS also encourages people to file their income tax return as soon as possible. The IRS will begin issuing economic stimulus payments starting in May.

The IRS reminds taxpayers it does not gather information for stimulus payments over the telephone, and it does not send unsolicited e-mail to taxpayers about tax account matters. If taxpayers receive an unsolicited e-mail from someone claiming to be from the IRS, don't click on any links. People should forward it to phishing@irs.gov, and then delete it. The only official IRS Web site is located at www.irs.gov.

To be eligible for economic stimulus payments, people must have valid Social Security numbers, have at least $3,000 in qualifying income and not be a dependent or eligible to be a dependent on someone else’s income tax return.

For taxpayers who normally file an income tax return, the maximum stimulus payment is $600 ($1,200 for married couples), amounts that will phase out starting with adjusted gross income of $75,000 ($150,000 for married couples). For taxpayers who file a 2007 income tax return, the amount of the economic stimulus payment will be calculated automatically by the IRS.

Does Social Security recognize common law marriage for the purpose of paying survivors and spouse's benefits?

Social Security follows the laws of the state where the worker was residing at the time of death or the place where the worker is residing when the spouse applies for benefits. In order for a common law marriage to be valid, it must have been contracted in a state where common-law marriages are recognized.

Many states do not honor common-law marriages, so you should check local laws. However, most states (even those in which a man and woman could not enter into a valid common-law marriage) will generally recognize a common-law marriage validly entered into in another state. Again, check local laws.

I have never worked but my spouse has. What will my benefits be?

You can be entitled to as much as one-half of your spouse's benefit amount when you reach full retirement age. If you want to get Social Security retirement benefits before you reach full retirement age, the amount of your benefit is reduced permanently. The amount of reduction depends on when you will reach full retirement age.

For example:

If your full retirement age is 65, you can get 37.5 percent of your spouse's unreduced benefit at age 62;

If your full retirement age is 66, you can get 35 percent of your spouse's unreduced benefit at age 62;

If your full retirement age is 67, you can get 32.5 percent of your spouse's unreduced benefit at age 62.

The amount of your benefit increases at later ages up to the maximum of 50 percent at full retirement age. If your full retirement age is other than those shown here, the amount of your benefit will fall between 32.5 percent and 37 percent at age 62.

However, if you are taking care of a child who is under age 16 or who gets Social Security disability benefits, you get full benefits, regardless of age.

Your spouse must file for benefits before you can begin receiving them on his or her record.

You can get Medicare when you reach age 65 or, if you are disabled or have permanent kidney failure, you can get Medicare if you are younger than 65.

Medicare provides hospital insurance, medical insurance and prescription drug coverage. Hospital insurance, sometimes called Part A, covers inpatient hospital care and certain follow-up care.

Your spouse already has paid for it as part of his or her Social Security taxes while working. Medical insurance, sometimes called Part B, pays for physicians' services and some other services not covered by hospital insurance.

Prescription drug coverage, sometimes called Part D, helps pay for medications doctors prescribe for treatment. Medical insurance and prescription drug coverage are optional, and you must pay monthly premiums.

If you are already getting Social Security benefits when you turn 65, your Medicare starts automatically. If you are not getting Social Security, you should sign up for Medicare before your 65th birthday if your spouse is at least age 62 and has worked long enough.

How can I get a certified copy of a birth certificate?

In general you may obtain a certified copy of a birth certificate by writing or visiting the Bureau of Vital Statistics in the State where you were born.

For a complete listing of addresses by State, we recommend that you visit the National Center for Health Statistics website.

Costs and requirements vary, so review the instructions on the website first.

Issue Number: TT-2008-44

Inside This Issue

Beware of Tax Scams

Don’t fall victim to tax scams. These schemes take several shapes, ranging from promises of large tax refunds to illegal ways of “untaxing” yourself.

The IRS suggests that you remember three important guidelines:

You are responsible and liable for the content of your tax return.

Anyone who promises you a bigger refund without knowing your tax situation could be misleading you, and

Never sign a tax return without looking it over to make sure it is accurate.

Beware of these common schemes:

Return Preparer Fraud:

Dishonest tax return preparers can cause many headaches for taxpayers who fall victim to their ploys. Such preparers derive financial gain by skimming a portion of their clients’ refunds and charging inflated fees for return preparation services. They attract new clients by promising large refunds. Choose carefully when hiring a tax preparer. As the saying goes, if it sounds too good to be true, it probably is. No matter who prepares your tax return you are ultimately responsible for its accuracy and for any tax bill that may arise due to a questionable claim.

Identity Theft:

It pays to be choosy when it comes to disclosing personal information. Identity thieves have used stolen personal data to access financial accounts, run up charges on credit cards and apply for new loans. The IRS is aware of several identity theft scams involving taxes or scammers posing as the IRS itself. The IRS does not use e-mail to contact taxpayers about issues related to their accounts. If you have any doubt whether a contact from the IRS is authentic call 800-829-1040 to confirm it.

Frivolous Arguments:

Promoters have been known to make outlandish claims that the Sixteenth Amendment concerning congressional power to establish and collect income taxes was never ratified; that wages are not income; that filing a return and paying taxes are merely voluntary; and that being required to file Form 1040 violates the Fifth Amendment right against self-incrimination or the Fourth Amendment right to privacy. Don’t believe these or other similar claims. Such arguments are false and have been thrown out of court. Taxpayers have the right to contest their tax liabilities in court, but no one has the right to disobey the law.

For more information about these and other tax scams visit the IRS Web site at IRS.gov.

Remember that for the genuine IRS Web site be sure to use .gov. Don't be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is IRS.gov.

Issue Number: IRS TAX TIP 2008-Special Edition

Inside This Issue

Don't miss out on your stimulus payment

Are you wondering what to do to ensure that you receive your economic stimulus payment which the IRS will begin to send out this May? In most cases you will not have to do anything extra. If you are eligible for a payment, all you have to do is file a 2007 tax return and the IRS will do the rest.

However, recipients of Social Security, certain Veterans' and Railroad Retirement benefits and low-income workers who don’t normally need to file may have to take steps to insure receipt of the stimulus payment.

If you are in this group and normally would not be required to file a tax return, you need to file a 2007 tax return this year to receive an economic stimulus payment. The return must show at least $3000 in qualifying income.

Qualifying income includes Social Security benefits, certain Railroad Retirement benefits, certain veterans’ benefits and earned income, such as income from wages, salaries, tips and self-employment. While these people may not be normally required to file a tax return because they do not meet the filing requirement, the IRS emphasizes they must file a 2007 return in order to receive a payment.

The IRS has released a sample version of a Form 1040A that highlights the simple, specific sections of the return that can be filled out by people in these categories to qualify for a stimulus payment.

For more information see IRS Fact Sheet FS 2008-16 Stimulus Payments: Instructions for Low-Income Workers and Recipients of Social Security and Certain Veterans’ Benefits available on www.irs.gov.

Be aware that identity thieves are already pushing scams involving the stimulus payments. At least one telephone scam is making the rounds using the proposed rebates as bait. IRS news release IR-2008-11,”IRS Warns of New E-Mail and Telephone Scams Using the IRS Name; Advance Payment Scams Starting,” has more details.

Remember that for the genuine IRS Web site be sure to use .gov. Don't be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www .irs.gov.

My husband and I are both entitled to our own Social Security benefits. Will our combined benefits be reduced because we are married?

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If both my spouse and I are entitled to benefits, is there any reduction?

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If both my spouse and I are entitled to Social Security benefits, is there any reduction in our payments?

When each member of a married couple works in employment covered under Social Security and they meet all other eligibility requirements to receive Social Security retirement benefits, their lifetime earnings are calculated independently to determine their Social Security benefit amounts.

Therefore, each spouse receives a monthly benefit amount based on his or her own earnings. Couples are not penalized simply because they are married.

If one member of the couple earned low wages or failed to earn enough Social Security credits (40) to be insured for retirement benefits, he or she may be eligible to receive benefits as a spouse.

When I start receiving benefits, will my benefit amount be the same for the rest of my life?

Your benefit amount will not stay the same--generally, the benefit amount increases each year and protects beneficiaries against inflation. Social Security provides an annual cost-of-living increase that is based on the consumer price index.

The 2008 increase for beneficiaries is 2.3 percent and the 2007 increase was 3.3 percent.

There is another way that your benefit might increase. When you work, you continue to pay Social Security taxes, even though you are receiving benefits.

And because you pay these taxes, Social Security refigures your benefits to take into account your extra earnings. If the worker's earnings for the year are higher than the earnings that were used in the original benefit computation, Social Security substitutes the new year of earnings. The higher your earnings, the more your refigured benefit might be.

We can't tell you here how much your benefit will increase as each case is different and we recompute your benefit using your lifetime earnings.

You need not take any special action. A recomputation of your benefits will be done automatically in the year following the close of the year in which you worked. We usually complete all recomputations by September of the following year (remember, employers do not report your income to us until February 28 of the year following the year of earnings).

If you are entitled to a higher benefit, it is retroactive to January of the year after the year when you had the additional earnings.

Does a spouse, age 62, receive Medicare benefits when his/her aged 65 husband/wife does?

Generally not. The minimum age for Medicare eligibility is 65. But, if you've been getting Social Security disability benefits for 24 months you can receive Medicare at any age.

What's the average monthly Social Security benefit for a retired worker? The average monthly Social Security benefit for a retired worker is about $1,050 as of the end of June 2007. Information on the estimated impact of the latest cost-of-living adjustment (COLA) on average monthly Social Security benefits can be found at.