Avoiding Surprises at Tax Time
We’re near the closing bell for this year, but for those who’ve been hit unexpectedly with the Federal Income Tax burden on their Social Security benefits, it’s a good idea to understand for subsequent years how that process works. It’s even more important for those who will soon experience their first year of filing with Social Security benefits as part of their income mix to understand the math, so that they can plan for it and avoid the surprises. Falmouth Enterprise contributor Jeffrey Cutter, CPA/PFS and president of Cutter Financial Group LLC provides a recap in a post today of the federal income tax process as it applies to Social Security benefits. Read his article here…
Cutter’s article also references one of the main complaints about this tax (that is, besides its being a form of double taxation leveled on folks who have paid the payroll tax throughout their working lives). Namely, the fact that the current actual thresholds have not been adjusted for inflation, and remain at the levels they were set at in 1993. This “bracket creep” has resulted in more and more folks falling into this taxation arena every year. Adjusting the threshold is one of the proposals found in some of the Social Security Reform proposals currently under consideration, but it’s kind of a long-shot unless it can be paired with a revenue offset. We’ll see what happens as the rhetoric heats up over the coming months.