What has changed for social security recipients in 2011? The biggest change is that social security recipients don’t get a cost-of-living increase in 2011. Due to no inflation recorded, the benefit amount doesn't change.

In a BLR webinar titled "Tax Savings for Small Businesses: How to Maximize Valuable Deductions and Avoid IRS Overpayments," Brian C. Greenberg, CPA, outlined some additional answers to social-security-related questions often faced by tax accountants.

Another common issue is determining when to begin taking your social security benefits. If you are at least 62 but are not 66 by the end of 2011, you have up to $14,160 in outside earnings before you lose any social security benefits. However, income over that amount will cause you to begin losing social security benefits. Every $2 of wages reduces benefits by $1. If you earn too much, you will lose the benefit entirely, and it would make no sense to apply to take the benefits.

Another common question is: when should you start taking social security? Assuming you are retired and don't have an income to cause your benefits to be reduced as outlined above, the first issue to ask yourself is whether you need the money. Typically if the answer is yes, then other questions around the financial do not even come into play. However, if you don't need the money because you have enough assets to live on, you would be well-served to wait until age 70 to take your benefits. If you look at the rate of return, you get, in essence, an 8 percent increase in benefits by waiting from age 65 to age 70. You will maximize your benefit at that point.

Finally, how much do you need to earn each year to be "in the system" and qualify for social security coverage? The amount needed to qualify for coverage stays at $1,120 a quarter. Earning $4,480 anytime during 2011 will net the full four quarters of coverage. This will make you a participant in the system and is particularly important for self-employed individuals.

Brian C. Greenberg, CPA, is the founder of Brian C. Greenberg & Associates, LLC, a New Jersey-based tax accounting firm. (www.greenbergcpa.com) With 30 years of experience as an accountant, Greenberg has developed a diversified background to service his clients’ needs. Greenberg has extensive media experience both nationally and locally, commentating for the Wall Street Journal Report, Fox Business News, Bloomberg News, Forbes TV, and local TV in Philadelphia with ABC, NBC, and Fox. He has appeared as an analyst on the economy, stock market, taxes, budget issues, school issues, and more.

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