No tax on Soc. Sec.

Knight

Knight

Well-known Member
So little in the media about this.

Not the entire article.

Eliminating federal income tax on Social Security retirement benefits could benefit many retirees, especially those who receive other types of taxable income, such as from wages or distributions from retirement accounts. That’s because up to 85% of Social Security benefits are taxable at the federal level.

According to one analysis by the Social Security Office of the Actuary, provisions in the You Earned It, You Keep It bill would also benefit retirees (and other Social Security recipients) for decades. That’s because the bill would ensure payments could be made in full through 2054. That’s significantly longer than the current projection of the Social Security program becoming insolvent by 2034, based on a report from the Social Security and Medicare Boards of Trustees.

That same analysis finds that passing the proposed legislation would significantly reduce federal debt over the next several decades by nearly $9 trillion. That’s because eliminating the tax on Social Security benefits would be paid for by increasing taxes on higher earners.

Will Retirees Stop Paying Tax on Social Security Next Year?

Caught in the 85% bracket but not a high earner of course I see a benefit to my wife & me. Will be interesting to know how this pans out.
 

I've never heard of the "Trust Fund." Can you explain a bit more about it? Does that kick in to bolster Soc. Sec. payments in future?

I'm also not sure if we pay Federal income tax on Soc. Sec. or not. I know it goes into the mix on the Federal forms. I DO know that Maine does NOT tax Soc. Sec. and pension amounts up to $25K per year.
 
Taxing one's Social Security benefits began in 1984 because of a$$!@#% politicians ever looking for sneaky ways to tax us more. Was bad enough they had begun raiding the fund instead of letting it accrue interest. The notion of taxing a returned tax given is ridiculous. And then the greedy a$$h!@#s in states did the same. Fortunately most states have ended that and the IRS ought too.

Last year, my SS benefit income alone was more than the IRS threshold so was supposed to send in a return but have not thus far because I resent it and the penalty is chump change.
 
When you think about it earning get taxed multiple times. From your regular pay FICA, Medicare, and Medicaid funds are withheld, but does not reduce the amount included in taxable income. However, your employer can deduct their contribution to those pools. The once you retire the benefits you receive may be taxed again if you have enough earned income to push you into a taxable situation based on a bazar formula. Best I can tell that is double taxation.
 
I'm a lot less concerned about paying taxes on my SS than I am about Congress and the President working together to solve the looming SS and Medicare funding crises.

Yes, I pay federal income taxes on my SS every year. So be it. My bigger worry is having my SS checks slashed because politicians spent too many years kicking this can down the road.
 
Soc Sec is considered one of those sacred areas that politicians talk a lot about, but shy away from roll call votes in the negative on issues. If all the funds diverted from the trust fund to non-social security items were replaced the issue would be nearly solved. Though unpopular it is easier for them to vote for raising the retirement age or increasing the maximum subject to taxation. Always looking for a shield to hide behind.
 
About 23% of my SS got taxed by the Feds. The state of New Jersey does not tax SS benefits.
@StarSong I agree with your comment "My bigger worry is having my SS checks slashed because politicians spent too many years kicking this can down the road."
 
It always amazes me that the politician who introduces legislation on something, finds a way to cast its negative effects on someone else's doorstep when it should come back to bite them in the posterior.
 
dilettante said:
How much of the "gig economy" and 1099 or cash under the table employment is not contributing to FICA?
Click to expand...
1099 workers pay both their and their employers' share of FICA - their remunerations are reported directly to the govt. My son is a contract worker (film producer) and from time to time DH & I hired contract workers, so I know whereof I speak.

As I said in another thread:
Being paid in cash may seem good at the time, but can be disastrous in the long run. Avoiding taxes, including SS taxes, makes people plenty sorry when it's time to file for benefits. Employers who don't make you pay taxes are also not paying their share on your behalf, nor are they paying disability or worker's comp insurance.

Teenagers getting a few dollars for babysitting neighbors' kids is a lot different from a lifetime of being paid under the table.

An acquaintance now in her late 60s was a lifelong waitress/bartender in high end restaurants and bitterly attests to this. As was typical, she declared almost none of her tips. After decades of working on her feet, she is no longer young, adorable, perky and energetic, so can no longer waitress, but her SS is so small that she's stuck working a hotel front desk night shift for little more than minimum wage. Unmarried, no children, no savings or assets, rents an apartment, and has no safety net to speak of. What saves her is a couple of generous siblings who help out from time to time.
 
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