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Trusted Social Butterfly

Re: Social Security/New tax bill

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Message 11 of 36

@GailL1  You said,

"There is one way to stop these taxes on your SS benefit - decrease the amount of other income." 

 

You are so funny, Ha, Ha, Ha.  

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Valued Social Butterfly

Re: Social Security/New tax bill

9,542 Views
Message 12 of 36

s152429g wrote:

Well, I disagree.  The tax worksheet for annual SS income uses a multiplier that taxes a portion of this income.  And, this is a very sizeable portion for those of us who must still work to make ends meet, and then are penalized for it.  And, I repeat, this distribution indeed has already been taxed. 

 

To wit, year end W-2 payroll deductions for SS contributions list it as "SS Tax Withheld" and this is not a deductible during the years in which it is paid by the employee.  You can explain the SS Administration budget in an attempt to claim that it has not been taxed, but the facts tell us otherwise. 

 

To wit, the SS dministration was established to create retirement income, based upon workers' incomes without being taxed by the IRS.  It was only later by creative challenges to the SS ACT that joint congressional-executive branch efforts brought about changes in terminology, to tax once again a portion SS benefits, in order to balance the national budget.  These deceitful acts were done on the backs of american workers, and it is upon these changes in terminology which allows you to cite that it is not being taxed twice.  Furthermore, it doesn't make any difference to the retired benificiary whether it is a SS tax or an IRS tax.  It is still at the end of the day, simply a double tax. 


You NEVER paid taxes on the part of the SS or Medicare contributions made for you by your employer.  That's why you only use 1/2 of your benefit to actually figure any tax owed on your SS benefit.     Social Security Benefit Tax Worksheet - see lines 1 and 2

 

Your W-2 during your working years showed ONLY the portion that was paid by you NOT the amount matched by your employer which they pay or deposit directly to the SSA on a periodic schedule during the year while you were working.   You paid income taxes on the amount which you paid as your contribution but the employers (matched) contribution was not taxed at all - no tax paid by you and no tax paid by the employer.  

 

The Social Security Amendments of 1983 made lots of changes to the Social Security system in order to save it from insolvency.  The taxation of benefits originated with this legislation.

 

There are lots of myths and misinformation about the system, its development and changes through the years.   SSA.gov - History: Myths and Misinformation - Part 2

Q2: Which political party eliminated the income tax deduction for Social Security (FICA) withholding?

A2: There was never any provision of law making the Social Security taxes paid by employees deductible for income tax purposes. In fact, the 1935 law expressly forbid this idea, in Section 803 of Title VIII.

 

Q3. Which political party started taxing Social Security annuities?
A3. The taxation of Social Security began in 1984 following passage of a set of Amendments in 1983, which were signed into law by President Reagan in April 1983. These amendments passed the Congress in 1983 on an overwhelmingly bi-partisan vote.

The basic rule put in place was that up to 50% of Social Security benefits could be added to taxable income, if the taxpayer's total income exceeded certain thresholds.

 

Q4. Which political party increased the taxes on Social Security annuities?

A4. In 1993, legislation was enacted which had the effect of increasing the tax put in place under the 1983 law. It raised from 50% to 85% the portion of Social Security benefits subject to taxation; but the increased percentage only applied to "higher income" beneficiaries. Beneficiaries of modest incomes might still be subject to the 50% rate, or to no taxation at all, depending on their overall taxable income.

This change in the tax rate was one provision in a massive Omnibus Budget Reconciliation Act (OBRA) passed that year. The OBRA 1993 legislation was deadlocked in the Senate on a tie vote of 50-50 and Vice President Al Gore cast the deciding vote in favor of passage. President Clinton signed the bill into law on August 10, 1993.

 

Part 1

Myth 5: President Roosevelt promised that the annuity payments to the retirees would never be taxed as income

Originally, Social Security benefits were not taxable income. This was not, however, a provision of the law, nor anything that President Roosevelt did or could have "promised." It was the result of a series of administrative rulings issued by the Treasury Department in the early years of the program.

In 1983 Congress changed the law by specifically authorizing the taxation of Social Security benefits. This was part of the 1983 Amendments, and this law overrode the earlier administrative rulings from the Treasury Department.

 

There is one way to stop these taxes on your SS benefit - decrease the amount of other income.

Millions of seniors live only off their SS benefit, nothing else - they pay no tax.

 

Perhaps it would be better to tax ALL employee benefits including their employer matched payroll taxes and even their employer subsidized healthcare coverage benefits.

 

With SS being in such dire financial shape, I would imagine we will have other changes coming real soon and there is only a finite manner of doing this -

  • increasing revenues to the programs
  • decreasing benefits in some manner
  • or some combination of both

 

 

 

 

 

 

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Valued Social Butterfly

Re: Social Security/New tax bill

9,536 Views
Message 13 of 36

cat0w wrote:

@GailL1  You said, "The Social Security benefits tax is NOT an income tax; it is a Social Security tax"

 

I have read several of your post where you have written this, but, if what you are saying is true then why does my 1099 read, Voluntary Federal income tax withheld and shows the amount I had withheld. Am I missing something. 


There is more than one " Federal Income Tax" .   Many different (income based Federal ) taxes flow through our Federal Income tax system to the IRS - it is a way to collect them all at one time and then disburse them to the different area to which they are owed.  You see, that is why they are broken out either by line or form on the tax return. 

IRS 2017 Form 1040 -

see page 1 - line 20a & 20 b

see page 2 - "other taxes"

 

Liken it to a self-employed person who has submitted Estimated Tax payments during the year on form 1040-ES.  At tax time, they complete their return and determine all the various Federal taxes which they have to pay. They are added together for the grand total of Federal Taxes even though they run the gamut from income taxes to self-employment taxes - however each is designated by a particular Form or Line on the Tax Return.  

 

The AARP also has explained this - AARP FAQ - Are My Social Security Benefits Taxable?

Q: How much money does the federal government collect from taxes on Social Security, and what happens to that money?

A: In 2012, Social Security beneficiaries paid a total of $45.9 billion in income taxes on their benefits. The Social Security Trust Funds, from which benefits are paid, received $27.3 billion, while the Medicare Hospital Insurance Fund (HI) got $18.6 billion.

These deposits accounted for 3.2 percent of the year's income for the Social Security Trust Funds and 7.7 percent of the income of the HI trust fund.

 

From the SSA -

SSA.gov - Taxation of Social Security Benefits

 

Under legislation enacted in 1983, the Social Security Trust Funds receive income based on Federal income taxation of benefits. The funds receive taxes on up to 50 percent of benefits from single taxpayers with incomes over $25,000 and from taxpayers filing jointly with incomes over $32,000.

 

Legislation enacted in 1993 extended taxation of benefits. The legislation increased the limitation on the amount of benefits subject to taxation from 50 percent to 85 percent for single taxpayers with incomes over $34,000 and for taxpayers filing jointly with incomes over $44,000. All additional tax income resulting from the 1993 legislation is deposited in Medicare's Hospital Insurance Trust Fund.

 

And here is the actual Old Age & Survivors Trust Fund Receipts table - notice the origin in the receipt category (2nd table):  Income from taxation of benefits began in 1984.

SSA.gov - Old-Age and Survivors Insurance Trust Fund Receipts 1937 - 2016

 

Total receiptsare made up of the following:
  • Net payroll tax contributions
  • Income from taxation of benefits
  • General Fund Reimbursements
  • Net interest on those special SS Treasuries

 

And this is from the 2017 Social Security Trustee Report Summary

 

Table 3. Program Income   (in billions) -

                                                            OASI      DI           HI         SMI

Source (in billions)                       
Payroll taxes$678.8$157.4$253.5
Taxes on OASDI benefits31.61.223.0
Interest earnings87.01.47.7$2.1
General Fund reimbursements0.1a1.229.9
General revenues$288.1
Beneficiary premiums3.385.9
Transfers from States10.0
Otheraa2.13.4
Total797.5160.0290.8

419.4

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Re: Social Security/New tax bill

9,448 Views
Message 14 of 36

Well, I disagree.  The tax worksheet for annual SS income uses a multiplier that taxes a portion of this income.  And, this is a very sizeable portion for those of us who must still work to make ends meet, and then are penalized for it.  And, I repeat, this distribution indeed has already been taxed.  To wit, year end W-2 payroll deductions for SS contributions list it as "SS Tax Withheld" and this is not a deductible during the years in which it is paid by the employee.  You can explain the SS Administration budget in an attempt to claim that it has not been taxed, but the facts tell us otherwise.  To wit, the SS dministration was established to create retirement income, based upon workers' incomes without being taxed by the IRS.  It was only later by creative challenges to the SS ACT that joint congressional-executive branch efforts brought about changes in terminology, to tax once again a portion SS benefits, in order to balance the national budget.  These deceitful acts were done on the backs of american workers, and it is upon these changes in terminology which allows you to cite that it is not being taxed twice.  Furthermore, it doesn't make any difference to the retired benificiary whether it is a SS tax or an IRS tax.  It is still at the end of the day, simply a double tax. 

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Trusted Social Butterfly

Re: Social Security/New tax bill

5,167 Views
Message 15 of 36

@GailL1  You said, "The Social Security benefits tax is NOT an income tax; it is a Social Security tax"

 

I have read several of your post where you have written this, but, if what you are saying is true then why does my 1099 read, Voluntary Federal income tax withheld and shows the amount I had withheld. Am I missing something. 

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Valued Social Butterfly

Re: Social Security/New tax bill

5,330 Views
Message 16 of 36

s152429g wrote:

We are definitely justified in arguing that we should never be taxed twice on any portion of our income.  And yet, this deceitful act by the federal government is not just limited to levying a tax a second time on our SS income, there are many in congress looking at ways to do the same with our money that we pay in state income taxes.

 

Furthermore, as it appears we retirees are still in the dark regarding taxation of our SS benefits under the new IRS tax laws, why does our AARP not come forth and provide this information for us?

I think we should expect more for our membership dues on this matter than just a forum for sharing our frustrations.  At the very least, we need to be kept in the loop.  And, has our AARP done enough to represent us as retirees and future retirees before congress?  Am I alone in this point of view?


You are not being taxed twice - the Social Security benefit tax is only applicable to 1/2 of your benefit - consider it the half which your employer contributed which matched your contribution during your working years - this is the part that was never taxed.  You paid income tax on your part of the contributions during your working years but the part your employer matched was not taxed.

 

The amount of this Social Security Benefit tax is not an income tax - it is a Social Security tax and the amount paid is put into the Social Security Trust Fund because it was part of the Social Security reform back in the 80's.

 

The base line income amounts over which a beneficiary is required to pay this additional Social Security tax was not linked to inflation, therefore these amounts depending on your filing status have never change - that another part of this previous SS reform - as time goes by more and more beneficiaries are subject to this SS benefit tax.

 

Any changes to this Social Security tax on benefits would have to be part of Social Security reform and NOT part of any income tax changes.

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Valued Social Butterfly

Re: Social Security/New tax bill

5,324 Views
Message 17 of 36

BarbaraS298287 wrote:

So bottom line we get nothing in our social security income based on the new tax law.

Figures........


The Social Security benefits tax is NOT an income tax; it is a Social Security tax - it goes back into the Social Security Trust Fund when it is paid in whatever tax year..

 

The Social Security beneftis tax is only applicable on half of the benefit along with other countable income over the base line.  Only on half of the benefit because this is the part that has never been taxed - the employer contribution part. 

 

The income base for inclusion into this additional Social Security tax is not and has never been linked to inflation, thus more and more beneficiaries are becoming included in it.  That's pretty much the way it was designed since it help the Social Security Trust Fund to remain solvent - back then (1983) and now.

 

Any changes to this Social Security tax on benefit or even the income base line when it become applicable would have to be changed as part of Social Security reform and not income tax reform..

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Re: Social Security/New tax bill

1,957 Views
Message 18 of 36

@BarbaraS298287  That depends on your income. I plan on waiting until next year to see if I need to lower what I am having withheld for taxes. If I do then that would mean a little more for me each month.

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Re: Social Security/New tax bill

1,917 Views
Message 19 of 36

So bottom line we get nothing in our social security income based on the new tax law.

Figures........

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Info Seeker

Re: Social Security/New tax bill

6,265 Views
Message 20 of 36

We are definitely justified in arguing that we should never be taxed twice on any portion of our income.  And yet, this deceitful act by the federal government is not just limited to levying a tax a second time on our SS income, there are many in congress looking at ways to do the same with our money that we pay in state income taxes.

 

Furthermore, as it appears we retirees are still in the dark regarding taxation of our SS benefits under the new IRS tax laws, why does our AARP not come forth and provide this information for us?

I think we should expect more for our membership dues on this matter than just a forum for sharing our frustrations.  At the very least, we need to be kept in the loop.  And, has our AARP done enough to represent us as retirees and future retirees before congress?  Am I alone in this point of view?

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