Medicare

Your taxable Social Security Benefits. How you pay twice and more… and still not enough

If your individual modified adjusted income is $85,596.68 or more or if your joint income is more than $110,772.17 you pay income tax on up to 50% or up to 85% of your Social Security benefit.

Nope, that’s not true, it should be, but it’s not.

Those numbers above are what the income points would be for taxing Social Security Benefits if the original amounts from 1983 had been adjusted for inflation. The current amounts are shown below. These taxable points are one of the very few amounts in the tax code that are not indexed for inflation. 

Lets think about this. Most people pay Social Security payroll taxes on 100% of their working income  as do their employers  Then many people pay income taxes on half of their Social Security benefits and that money also goes to help fund Social Security.

Some people, those with incomes above $34,000 a year (from all sources), are even luckier,  they get to pay income tax on 85% of their SS benefits. [In theory at least these people are paying taxes on benefits they funded themselves given they funded half of the total benefit]. The taxes on the first 50% go to fund SS and the taxes on the remaining 15% go to help fund Medicare. These “wealthy” Americans pay twice for Social Security and three times for Medicare including premiums (premiums substantially higher than the average most likely).

It’s all a giant tax shell game … and still all those taxes are not enough to keep Social Security and Medicare from going broke?  Don’t you just love government financing? And heck, why shouldn’t we expand these programs as Sen Sanders and many others suggest? 

Source: Social Security.gov.

No one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service (IRS) rules. If you:

• file a federal tax return as an “individual” and your combined income *is

◦ between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.

◦ more than $34,000, up to 85 percent of your benefits may be taxable.

• file a joint return, and you and your spouse have a combined income *that is

◦ between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits

◦ more than $44,000, up to 85 percent of your benefits may be taxable.

• are married and file a separate tax return, you probably will pay taxes on your benefits.

Your adjusted gross income

+ Nontaxable interest

+ ½ of your Social Security benefits

= Your ” combined income

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9 replies »

  1. Sorry I posted more than once.. my post kept NOT posting…
    so I reduced the number of links thinking that was the problem.
    Now is appears all my posts and links have posted… sorry.
    But the info at all those links is interesting…and scary !!

    .

    Like

  2. .

    I just now left a comment that says it awaits moderation… why ??

    Speaking of taxes… check this out.

    Some in Illinois are advocating a statewide property tax to fund pensions.

    Pension funding problems are widespread… so if this flies, other states might do this.

    Chicago Fed economists recommend statewide property tax

    http://www.chicagobusiness.com/realestate/20180514/CRED0701/180519952/jack-up-property-taxes-for-pensions-say-three-chicago-fed-economists

    Chicago Fed Recommends State-wide Property Tax To Reduce Public-sector Pension Funding Shortfall

    https://confoundedinterest.net/2018/05/13/chicago-fed-recommends-state-wide-property-tax-to-reduce-public-sector-pension-funding-shortfall-the-confiscation-train-is-rolling/

    More info here

    https://www.rushlimbaugh.com/daily/2018/05/14/illinois-liberals-destroy-home-values-fund-union-pensions/

    ..

    Like

  3. Speaking of taxes… check this out.

    A special statewide property tax to fund pensions ??

    Pension funding problems are widespread… so if this flies, other states might do this.

    Chicago Fed economists recommend statewide property tax

    http://www.chicagobusiness.com/realestate/20180514/CRED0701/180519952/jack-up-property-taxes-for-pensions-say-three-chicago-fed-economists

    More info here

    https://www.rushlimbaugh.com/daily/2018/05/14/illinois-liberals-destroy-home-values-fund-union-pensions/

    .

    Like

  4. Speaking of taxes… check this out.

    What’s this news about some in Illinois advocating another statewide property tax to fund pensions ??

    Pension funding problems are widespread… so if this flies, other states might do this.

    Chicago Fed economists recommend statewide property tax

    http://www.chicagobusiness.com/realestate/20180514/CRED0701/180519952/jack-up-property-taxes-for-pensions-say-three-chicago-fed-economists

    Chicago Fed Recommends State-wide Property Tax To Reduce Public-sector Pension Funding Shortfall

    https://confoundedinterest.net/2018/05/13/chicago-fed-recommends-state-wide-property-tax-to-reduce-public-sector-pension-funding-shortfall-the-confiscation-train-is-rolling/

    More info here

    http://www.investmentwatchblog.com/illinois-to-impose-1-property-tax-on-top-of-everything-annually-for-30-years/

    https://www.rushlimbaugh.com/daily/2018/05/14/illinois-liberals-destroy-home-values-fund-union-pensions/

    .

    Like

  5. I do not know why anyone would complain about paying taxes on any Social Security benefit.
    I will pay the tax in about 5 years when my retirement income increases, will trigger the income tax on 50%. No complaints, because no one paid for the total benefits that they will receive from SS in retirement. I will have everything that was paid in SS tax back well before any income tax will be paid, most people have only paid for about 8 years of benefits. The government will pay for the rest with DEBT in most cases and us boomers will be long dead when the DEBT bomb explodes.

    Like

    • You’re mostly right except the government has no money and can’t pay for anything. Even today the benefits being paid are mostly paid by the payroll taxes of current workers. Don’t be so sure about that debt bomb, between now and 2034 $2.9 trillion in SS bonds have to be redeemed.

      Like

  6. You can thank Reagan for the first tax on SS income [Clinton expanded it]… and Trump and the current congress for not even addressing that SS tax injustice in their latest tax reform.

    .

    Like

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