General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region Forumspaying tax on social security benefits
i got disability benefits back in 1990. i've always paid tax on it because of hubby's income. hubby is gone now and i have a decent income so i still pay on 85% of my benefits.
does anyone know if the amount earned has changed over the years? i thought it was much higher than it is now.
now it's if you are single and earn more than $32,000 or $44,000 filing jointly. i thought those amounts were higher in the past.
Cicada
(4,533 posts)That they are not adjusted for inflation means that in inflAtion adjusted dollars you are correct. $25000 ten years ago was more money than $25000 is now. The failure to adjust for inflation means the "real" tax rate is rising over time. Also this tax is really a way to means test social security. Means testing is political poison so they pretend it is a tax instead.
DesertFlower
(11,649 posts)i told a friend about it today. he said they won't have to pay taxes, but his wife will be getting a pension so they probably will.
Cicada
(4,533 posts)doc03
(36,501 posts)been adjusted for inflation. Adjusted for inflation $32000 would be $77500 and $44000 would be $106,500. I have brought this up
on DU numerous times and it never gets any attention. I am single and get SS, a modest pension and saved money in an IRA. If I
withdraw under $12500 from my IRA I pay a combined state and federal tax of about 35%. If I withdraw over $12500 my tax rate jumps to over 45%. Until a majority of married retirees start getting hit with this tax I guess we will have to live with it.
DesertFlower
(11,649 posts)and his 401k which had a nice amount in it. i give most of the 401k payment to charity. house is paid for. i don't know what my combined rate is. in arizona social security payments are not taxed. i pay more for medicare too, but i don't mind that especially since medicare is in trouble. it's only fair that i pay more.
doc03
(36,501 posts)what can I say. I don't mind paying taxes but this law causes me to pay a tax rate above the highest tax rate.
I think the highest tax rate is 33%.
DesertFlower
(11,649 posts)i'm paying, but i don't mind paying more for the medicare.
doc03
(36,501 posts)almost $4500 tax on that $12500. We were told years ago we could deposit money in an IRA our taxes would be deferred until
we retired and we would most likely be in a lower tax bracket. The thing is if we would have just invested the money ourselves
we would be paying capitol gains of 15% instead.
Cicada
(4,533 posts)So without an Ira you would have had less to invest, the income reduced by the tax on it. If tax rate is unchanged you end up with exactly the same amount, with or without an IRA. Roughly.
doc03
(36,501 posts)never gets any traction. Until eventually the overwhelming majority of SS recipients are affected by this nothing will ever be done
DesertFlower
(11,649 posts)is over $18,000 a year.
back in '85 my mom was collecting ss -- very small amount and living off a small amount of savings. she won $50,000 and had to pay over $17,000 in tax. her car was on its last leg so she bought a honda civic -- i think it was about $12,000. some people said "you won $50,000 -- why didn't you buy a cadillac"? she put the remainder of the money in the bank and drew on it as needed.