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Income Tax on Social Security Benefits - Good, or Not?
Many new Social Security beneficiaries are perplexed to find that the SS benefits they received are subject to income tax. Income tax on Social Security benefits was first enacted in 1983 to help restore the program to fiscal solvency at that time, and further taxation of benefits for higher earners was implemented in 1993. When taxation was first enacted, only about 10% of Social Security recipient were required to pay income tax on their benefits - a number which has since ballooned to about 50% of beneficiaries. As you might expect, this is something of a political issues, and President Elect Trump has signaled his desire to do away with taxes on Social Security benefits. But would this be wise, considering that Social Security is facing insolvency in about 2033? This Yahoo! Finance article by Trevor Jennewine suggests it would not be wise, but - in the opinion of the Association of Mature American Citizens (AMAC) - if done in conjunction with other reform which offsets that loss of revenue, taxation of Social Security benefits could at least be mitigated to account for inflation. Indeed, the thresholds at which Social Security benefits become taxable haven’t been increased since legislation was first introduced many decades ago. To read the Yahoo! Finance article against stopping taxation of SS benefits, click here. The review AMAC’s plan for restoring Social Security to solvency (including mitigating how SS benefits are taxed), click here.
This posting is presented for informational purposes only and does not represent legal or financial guidance. Any opinions or interpretations presented are either those of the original author or, in the case of articles authored by the AMAC Foundation, are the opinions of AMAC Foundation staff, originally trained and accredited by the National Social Security Association (NSSA) and certified via the AMAC Foundation. Any links included in the article are valid on the posted date; socialsecurityreport.org cannot guarantee the duration of the links’ validity. NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (https://amacfoundation.org/services/) or email us at ssadvisor@amacfoundation.org. Because we are a non-profit organization, there is no charge for these services.