Strategies to Potentially Mitigate the Taxation of Your Social Security Benefit - Aiken Standard
Many have held the opinion that federal taxation of Social Security benefits is nonsensical double taxation, resulting in unfair curtailment of the retirement benefits that seniors have worked for and that they’ve been promised. Adding to this displeasure is the simple fact that the thresholds for inclusion of Social Security benefits in taxable income are decades old, having never been adjusted to compensate for average wage growth over time. The impact of this taxation–originally estimated to be felt by less than 10% of taxpayers–is now absorbed by more than half of all filers.
So, what to do about it? Legislative action was proposed in the 116th Congress (H.R. 3971 – Senior Citizens Tax Elimination Act introduced by Rep. Thomas Massie’s (R-KY), but it didn’t gain traction despite having three dozen co-sponsors. Perhaps one of the reasons for this was the Social Security program’s dismal financial picture–since the tax added $36.5 billion in revenue in 2019, elimination of it would require an offset from somewhere in order to avoid further aggravation of the program’s solvency issue. No matter what the reason, it remains to be seen whether the action will be reintroduced in the 117th congress.
In the interim, there are strategies available to deal with the benefit taxation matter, and they’re outlined in an article by On The Money’s Greg Roberts appearing on the Aiken Standard (South Carolina) website. Roberts covers the background on the tax issue, and outlines some basic pre-retirement planning steps one can take to soften the tax blow a bit. Read his post here…