Letter from SS announces 90% of people will owe no taxes on SS income.

EmptyCup

EmptyCup

Free Agent
Location
Arizona
#$@&%&@!
I ran the numbers on it ($6000 deduction) and I still have to pay taxes on SS Income. It’s my pension and investment income bumping me up too high. I’m in the 10%. Oh, well. All in all, I would rather have the pension. I am happy if others get a break, though. :)
 

The price for planning to be comfortable in retirement comes in the form of taxes. We to will get some relief but not what we hoped for. It is good that others will make out. Maybe next year we'll do better this year just happens to be when we will have to pay the interest accrued on the deferred tax on two annuities that exceed the FDIC coverage.
 
I don’t mind paying my fair share of taxes, I just don’t think that taxing or means testing Social Security was part of the original bargain that I made with the government.

It amazes me that approximately 40% of Americans pay no federal income tax.

I realize that people pay other forms of tax such as sales tax, fuel tax, etc…

IMO everyone should have a little skin in the game if they expect to have a say, vote, in how things should be done.
 

I salute all those seniors who had vision, understanding and diligence to save for much, much later. I don't bemoan my result. I knew my retirement would be on a shoestring.
 
EmptyCup said:
#$@&%&@!
I ran the numbers on it ($6000 deduction) and I still have to pay taxes on SS Income. It’s my pension and investment income bumping me up too high. I’m in the 10%. Oh, well. All in all, I would rather have the pension. I am happy if others get a break, though. :)
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Apparently you are rich.
 
Aunt Bea said:
I don’t mind paying my fair share of taxes, I just don’t think that taxing or means testing Social Security was part of the original bargain that I made with the government.

It amazes me that approximately 40% of Americans pay no federal income tax.

I realize that people pay other forms of tax such as sales tax, fuel tax, etc…

IMO everyone should have a little skin in the game if they expect to have a say, vote, in how things should be done.
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This is where CPAs and CFPs and experts make money by setting up tax steategies for other people. The whole thing is unnecessarily convoluted, but that’s the system.
 
When I filed for 2024, $4,484 of my SS was taxed! For 2023, $3,365 was taxed. My taxable income for 2024 was only a couple of thousand higher than 2023, so I don't understand why I paid over $1,100 more on SS. It would be nice to be among those 90%.
 
If DOGE had done the job right they would have saved you all those Tax Dollars. Haha
It just wasn't the plan, all snow-business, most likely at your cost too!

Pain, More Pain! ... :coffee: ...
 
OneEyedDiva said:
When I filed for 2024, $4,484 of my SS was taxed! For 2023, $3,365 was taxed. My taxable income for 2024 was only a couple of thousand higher than 2023, so I don't understand why I paid over $1,100 more on SS. It would be nice to be among those 90%.
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you may have crossed the point where your ss goes from 50% of it taxed to more of it at 85% of it taxed

plus think about this .

one could be right at the edge of not getting your ss taxed , but you pull 1k out of your ira for a trip .

in effect now the ss gets taxed and effectively that extra 1k was taxed at 50% since that is how much everything will cost you in taxes

kitces points out how very strange things can happen to marginal rates with ss

Example 1. Jeremy and Martha have an AGI of $28,000 (and no tax-exempt or foreign income), and receive combined Social Security benefits of $14,000. As a result, their provisional income is $28,000 + $7,000 (half of Social Security benefits) = $35,000, which is $3,000 above the $32,000 threshold. This means that 50% x $3,000 = $1,500 of their Social Security benefits are subject to taxation, which ultimately increases their AGI to $28,000 + $1,500 = $29,500.
 
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mathjak107 said:
you may have crossed the point where your ss goes from 50% of it taxed to more of it at 85% of it taxed

plus think about this .

one could be right at the edge of not getting your ss taxed , but you pull 1k out of your ira for a trip .

in effect now the ss gets taxed and effectively that extra 1k was taxed at 50% since that is how much everything will cost you in taxes

kitces points out how very strange things can happen to marginal rates with ss

Example 1. Jeremy and Martha have an AGI of $28,000 (and no tax-exempt or foreign income), and receive combined Social Security benefits of $14,000. As a result, their provisional income is $28,000 + $7,000 (half of Social Security benefits) = $35,000, which is $3,000 above the $32,000 threshold. This means that 50% x $3,000 = $1,500 of their Social Security benefits are subject to taxation, which ultimately increases their AGI to $28,000 + $1,500 = $29,500.
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Example 1b. Continuing the earlier example of Jeremy and Martha, if the couple decides to take another $1,000 out of their IRA, this will increase their AGI by $1,000 to $29,000.

As a result, it will also increase their provisional income by $1,000, which leaves them $4,000 above the threshold, resulting in $2,000 of their Social Security benefits being taxable. In the end, this means Jeremy and Martha end out with a total AGI of $31,000...


their AGI increased by $1,500 even though they only took out a $1,000 IRA withdrawal due to the taxation of Social Security benefits!

If the couple is subject to the 15% tax bracket, their additional tax liability on $1,500 of income is $225, which equates to a marginal tax rate of $225 (additional taxes) / $1,000 (additional income) = 22.5%. In other words, even though the couple is in the 15% tax bracket, their $1,000 IRA withdrawal is subject to a 22.5% marginal tax rate due to the formulas triggering taxation of Social Security benefits!
 
mathjak107 said:
you may have crossed the point where your ss goes from 50% of it taxed to more of it at 85% of it taxed

plus think about this .

one could be right at the edge of not getting your ss taxed , but you pull 1k out of your ira for a trip .

in effect now the ss gets taxed and effectively that extra 1k was taxed at 50% since that is how much everything will cost you in taxes

kitces points out how very strange things can happen to marginal rates with ss

Example 1. Jeremy and Martha have an AGI of $28,000 (and no tax-exempt or foreign income), and receive combined Social Security benefits of $14,000. As a result, their provisional income is $28,000 + $7,000 (half of Social Security benefits) = $35,000, which is $3,000 above the $32,000 threshold. This means that 50% x $3,000 = $1,500 of their Social Security benefits are subject to taxation, which ultimately increases their AGI to $28,000 + $1,500 = $29,500.
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I only take distributions from my traditional IRA for my RMD, which goes directly to St. Jude's every year. That being the case, those distributions are not taxes because it's a QCD. I had more in capital gains though, so maybe that's why. I didn't realize that it jumped from 50% to 85%! Thank you for pointing this out.
 
OneEyedDiva said:
I only take distributions from my traditional IRA for my RMD, which goes directly to St. Jude's every year. That being the case, those distributions are not taxes because it's a QCD. I had more in capital gains though, so maybe that's why. I didn't realize that it jumped from 50% to 85%! Thank you for pointing this out.
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yep , the marginal tax rates can be quite high for money that comes in as you go over the various thresholds .

1k more. no matter how it comes in can get your ss taxed very differently
 

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