Trump has good idea on taxing SS benefits

[VitaMan]

Currently a portion of SS benefits is taxed depending on your income.


Trump says that should stop. It is a good idea. That money has already been taxed once.


Unfortunately, that would make the SS system head toward insolvency sooner, and most of the benefits would go to the wealthier individuals.

[Jacky S]

Would they?
Due to the fact that I paind in the Max for decades, and waited until 70 to start drawing, I get the max. However, since I still work, and still make substantial income, (at 78 years old), they take income tax out of my SS check.

Does that seem fair?

[txdot-guy]

I thought fica reduced gross taxable income. Like a 401k or IRA you pay the taxes later. Am I mistaken?

[farmstud60]

Originally Posted by txdot-guy

I thought fica reduced gross taxable income. Like a 401k or IRA you pay the taxes later. Am I mistaken?

Yep


FICA taxes were never like 401K or IRA


Social Security was never taxed until Biden added them to the tax rolls maybe 20 years ago in a bill passed by Congress..I would have to look up the actual tax rules to explain correctly.

[VitaMan]

You pay tax on your income. Then you pay tax again if your SS is taxed.

That is not the same as a tax deferred 401k or IRA.

[VitaMan]

Originally Posted by Jacky S

Would they?
Due to the fact that I paind in the Max for decades, and waited until 70 to start drawing, I get the max. However, since I still work, and still make substantial income, (at 78 years old), they take income tax out of my SS check.

Does that seem fair?

The issue with this is keeping the SS system solvent. I think that is why this got started.

[Lucas McCain]

I'm not going to go into a long explanation about taxes, but as a general rule of thumb, you have to pay taxes eventually. For example, for a Roth IRA you are not taxed when you are eligible to receive it because you already paid taxes on it. For SS and a regular 401k, you normally don't pay taxes today, so you have to pay it later when you receive it.

It's much more complicated than that but it is a simple way to look at it. Just remember that if you worked for somebody or a company, your employer's half of your SS is not immediately taxed so you have to pay for that later. Your half is taxed so you don't.

As far as the SS system being solvent, I really don't see how it could be by the time I am eligible to receive it with or without taxes, so I expect nothing from it and save accordingly. I know I am just one of millions who help fund the older generation that receives it.

[txdot-guy]

Originally Posted by VitaMan

You pay tax on your income. Then you pay tax again if your SS is taxed.

That is not the same as a tax deferred 401k or IRA.

My mistake. I was thinking about the 6.2 percent of fica that is paid when self employed. That portion and your employer’s portion of fica are deductible from income taxes.

[VitaMan]

The best discussion of income tax is the song "TaxMan" by the Beatles

[farmstud60]

Originally Posted by txdot-guy

My mistake. I was thinking about the 6.2 percent of fica that is paid when self employed. That portion and your employer’s portion of fica are deductible from income taxes.

Self employed pay a higher amount than that. Workers have 6.2 taken out of pay check and employer machines it the same amount of money.

[Jacky S]

The bottom line is I receive a monthly benefit of $4873. The Federal income tax on this due to my income bracket is $1121. They do this for 85% of my income, the last 15% is tax free.

Of course, the Feds still take out SS on my weekly checks, plus Medicare. I am only in Medicare A since I have excellent private insurance. B and C would cost me a substantial amount due to my income bracket.

I do have a 401K that has around $600,000 in it, I had to draw out a little over $16,000 this year and pay the income tax on it at 24%, which is about what I get my taxable income down to after deductions.

Of course, I could decide to just finally quit working, and all of that withholding would drop substantially. But then, I would not be making north of $350,000 each year.

The simple fact is, as long as you, as a senior citizen keep on working and making a substantial earned income, (W-2), they will get their share.

As far as Social Security goes, I think I made a good choice by waiting until my max out year, (70), to start drawing. I’m 8 years in now, and in good health. I suppose my goal is to make it to 85 and still be in reasonably decent health. After that, well, who knows.

[Jacky S]

Another thing for all of you getting close to retirement.

The Government wants you to star drawing at the earliest and then hope you die young. Or keep on living and draw at that reduced locked in rate untill you die.

The last thing they want is for you to wait until your Max Out Year (70) and then live to be 90. They would love you to wait untill 70 and kill over one day later.

[VitaMan]

The government doesn't push anyone's retirement decision.

But here is a little something being pitched for your IRA and 401k retirement accounts. By none other than Don Jr. It states he is ready to "reveal" something. And he did train at the feet of the master pitchman DJT.

[VitaMan]