Taxes on Social Security: (WJW) As a result of a recent cost-of-living adjustment (COLA), millions of Social Security recipients are now receiving larger monthly checks. However, many are also discovering that they will be required to pay taxes on those benefits—taxes that some have never before been required to pay.
23% of respondents to a recent survey by The Senior Citizens League who received Social Security for three years or more reported paying taxes on it for the first time during the 2023 tax season.
Now, experts predict that the trend will continue in 2024 as a result of the 8.7% COLA increase that occurred last year.
February 2024 Social Security Payments: When Can You Expect Them?
The reason for this occurrence is as follows: As FOX News Business explains, even though Social Security has been adjusted annually for inflation since 1975, “the amount of benefits exempt from taxes has remained unchanged for decades.”
Mary Johnson, social security and Medicare policy analyst for The Senior Citizens League, predicted that “in 2024, taxes will take a larger portion of Social Security checks as a result of the higher Social Security income.” This impact is anticipated to extend beyond the current tax season.
Recipients of Social Security should calculate the amount by which their benefits are currently taxable.
The league has provided the following guide:
- To begin, determine your “combined income.” Proceed as follows: Add half of your Social Security benefits for the year to your adjusted gross income (line 11 on an IRS Form 1040), and then include any nontaxable interest (box 8 on an IRS Form 1099-INT). Your combined income is as follows:
- You may be required to pay income tax on up to 50% of your benefits if your combined income falls within the range of $25,000 to $34,000 and you file your federal tax return as an individual. Benefits exceeding $34,000 may be subject to taxation, up to 85% of which may be withheld.
- If you and your spouse have a combined income between $32,000 and $44,000 and file a joint return, you may be required to pay income tax on up to 50% of your benefits. 85% of your benefits may be subject to taxation if they exceed $44,000.
“Based on inflation through December 2023, had these thresholds been adjusted like federal income tax brackets, the individual filing status level of $25,000 would have been worth over $75,250, and the joint filer level would have been over $96,300,” the league explained in a news release.
If you still require assistance determining whether your benefits are now taxable, the IRS provides an interactive tax assistant instrument that can be accessed by clicking HERE.
Social Security Cuts: Examining the Poison Pill Commission and its Impact on Future Benefits
