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And a helluva lot of it seems to come out of nowhere. Funny how quickly that adds up to trillions of dollars of debt.
I hear folks complaining about how much the Federal Reserve keeps printing, but what I have not seen is how much of our annual Federal budget is this newly printed money?
Leave it to the Congress to make this more complicated than it needs to be.
From $0 to $25k in Total Income pay no tax on SS benefit
From $25k to $34k have 50% of benefit subject to tax
From $34k+ have 85% of benefit subject to tax
For married go $0 to $32k with no tax
then from $32k to $44k at 50%
then over $44k at 85%
The problem is more & more Americans are in one of these brackets. So they pay the tax.
Actually the 50% and 85% numbers are "up to" numbers, not "at" numbers.
And they are not "tax rates", just part of the formula to arrive at a taxable amount on Line 6B.
which is then part of Total Income > AGI >Taxable Income Line 15
FWIW, my taxable "up to" % generally runs around 60%
Income taxes paid on Social Security benefits go back into the SS trust fund. It's a small amount of total funding for the program, less than 5%.
This tax doesn't impact people who are living only on SS. However, people with other sources of income (pension, 401k, interest) can get hit significantly even though their overall income is modest. This was not the original intent, but the combined income thresholds have never been adjusted so it's now taxing people who are not at all "well off".
IMO, the income thresholds should be increased (a LOT), or as mentioned in the original post just eliminate SS taxation altogether. The lost revenue could be replaced with minor changes to the FICA income cap and the FICA tax rate.
Income taxes paid on Social Security benefits go back into the SS trust fund. It's a small amount of total funding for the program, less than 5%.
This tax doesn't impact people who are living only on SS. However, people with other sources of income (pension, 401k, interest) can get hit significantly even though their overall income is modest. This was not the original intent, but the combined income thresholds have never been adjusted so it's now taxing people who are not at all "well off".
IMO, the income thresholds should be increased (a LOT), or as mentioned in the original post just eliminate SS taxation altogether. The lost revenue could be replaced with minor changes to the FICA income cap and the FICA tax rate.
To show how low the threshold is for "outside income" (I may be off but not by much) it's $14,000 for singles and $32,0000 for a married couple.
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"at" vs "up to"
