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”