Taxation of Social Security Benefits Was Not Eliminated - MSN.com
The “One Big, Beautiful Bill Act,” which President Trump signed into law on July 4, has generated questions regarding the issue of benefit taxation. Here are some details that explain the new provision.
The taxation of Social Security benefits has not been eliminated. The $6,000 additional deduction that the “One Big Beautiful Bill Act” includes is only available to someone 65 years old or older. If you are married and both 65 or older, you get $6,000 each, for a total of $12,000. The amount of this reduction begins to be phased out for singles with a Modified Adjusted Gross Income (MAGI) of $75.000 and for married couples with a MAGI $150,000.
Suppose you are receiving your benefits before age 65 and typically pay taxes on your Social Security benefits. In that case, you will continue to include Social Security benefits in the calculation of your tax liability.
The Internal Revenue Service (IRS) determines the tax liability of your Social Security benefits based on the MAGI, which is determined by adding your AGI plus 50% of your Social Security benefits plus any non-taxable interest. The income limits the IRS uses were set in 1983 when Social Security first became taxable on up to 50% of your benefits. In 1993, that threshold was increased to 85% of your benefits. If you have other income besides your Social Security benefits (other than Roth accounts), odds are you will pay taxes on a portion of your Social Security benefits. The amount you will pay in taxes is based on your individual tax rate.
For singles, if your MAGI is over $25,000, you will pay taxes on up to 50% of your Social Security benefits; the threshold is $32,000 for married couples. For singles, once your MAGI exceeds $34.000, you pay taxes on up to 85% of your Social Security benefits, and for married couples, the threshold is $44,000. Married filing separately will be taxed at the single MAGI.
It is not mandatory to have taxes withheld from your Social Security benefits. You have three options for accounting for them. You can complete an IRS Form W-4V and submit it to your local Social Security office. Alternatively, if you’re employed, you can increase your payroll tax withholding, or you can file estimated tax payments. We recommend consulting with your tax advisor before starting your Social Security benefits to determine if any tax increases are required. Read the full article by Christian Perez Morales on MSN.com here …
The link provided above connects readers to the full content of the posted article. The URL (Internet address) for this link is valid on the posted date; socialsecurityreport.org cannot guarantee the duration of the link’s validity. Also, the opinions expressed in these postings are the viewpoints of the original source and are not explicitly endorsed by AMAC, Inc.; the AMAC Foundation, Inc.; or socialsecurityreport.org.