Getting Help Estimating Social Security Benefits
Q: I have been unable to obtain a clear explanation of the benefits I can expect to receive from Social Security. I was employed in the private sector for 10 years and have been a public employee for the past 20 years. I have a private business on the side and have been paying self-employment tax for the past eight years. I can’t seem to get a straight answer on how my public agency employment will affect my Social Security benefits. Can you help?-- L.J.H.
A: We’re not equipped to give you a precise answer, but we can tell you that you are eligible to receive Social Security, despite your stint with a government agency. However, your benefits will be reduced somewhat because of your government pension.
For a personal evaluation of your potential benefits upon retirement, write to the Social Security Administration and ask for a “Personal Earnings Benefits Estimate Statement,” otherwise known as form SSA-7004. Complete the form and return it to the agency, which will then notify you of your likely benefits upon retirement. You may obtain the estimate statement by calling 1-800-234-5772 or by writing to the Consumer Information Center, Department 55-SSA, Pueblo., Colo. 81009.
One-Time Exclusion for Home-Sale Profits
Q: My husband, age 61, and I, age 41, are planning to sell the house we live in. We have been married for two years, but have lived together in this house, which had been mine, for the past 18 years. We are hoping to benefit from the one-time $125,000 exclusion of profits from taxation when we sell the house. However, we recently discovered that because I didn’t have his name added to the deed on this house, we can’t take advantage of this exclusion. Is there anything we can do to avoid being taxed on the gain?-- M.G.M.
A: Your problem is that neither you nor your husband individually meets all the criteria for taking advantage of the $125,000 tax exemption. Your husband meets the age requirement because he is over age 55. You meet the requirement that a seller must have owned the house for three of the past five years. Both of you meet the final requirement that the house has been your principal residence for three of the past five years. But neither of you meets all three.
According to a private letter ruling No. 8352023 from the Internal Revenue Service, a couple cannot share the qualifications necessary to meet the tax break requirements. Although this letter is not legally binding, and can be ignored by the courts, it does give a pretty good indication that the IRS believes that you cannot take advantage of the $125,000 tax exemption at this time.
You have two ways to proceed if you want to avoid being taxed on the sale of your house. You can simply wait to sell until three years after the point at which you added your husband’s name to the deed. Or, more simply, you can defer your gain by buying a new home of equal or greater value than the one you are selling.
What to Do When You Inherit Stock
Q: I have 22 shares of Litton Industries that belonged to my deceased mother. How do I find out the status of the stock, and have the shares transferred to my name?-- S.J.
A: The first place to look is the newspaper to see if the stock is still listed on one of the trading exchanges. Litton is listed on the New York Stock Exchange, where it closed at $76 Friday.
However, it may not always be so simple to determine the status of the shares you inherit. In these cases, you can contact your broker for help. Brokers generally have extensive research materials at their disposal, and are willing to help a valued client. Other sources of historic stock information are at your public library.
As a last resort, and especially in cases where you have been unable to find any trace of the company whose shares you hold, you might consider retaining a stock research company that will charge you a fee for its services. Prudential American Securities Inc., which charges $35 per research job, is among the most reasonable. It is located at 921 East Green St., Pasadena, Calif. 91106.
If you decide to use a research firm, be sure to send them only a photocopy of your stock certificate.
Now how do you transfer the shares to your name? Your first step should be to learn the name of the company acting as the transfer agent for the firm whose shares you hold.
In some cases, the transfer agent’s name is listed on the stock certificate. If not, call the investor relations director of your company. Then contact the transfer agent and ask what their requirements are for transferring the name on inherited stock.
Chances are you will be required to show some proof that you legally inherited the shares and that the purchaser is actually dead.
