Daniel Langenfeld and Justin Dennis
60 minutes ago
(WJW) — Millions of Social Security recipients are seeing larger monthly checks thanks to recent cost-of-living adjustments (COLAs), but at the same time, many are paying less taxes on their benefits. I'm starting to learn that I have to pay. Some people have never had to pay.
according to recent research By the Elderly Federation, During the 2023 tax season, 23% of survey participants who had received Social Security benefits for three or more years said they paid taxes on Social Security for the first time.
Now, with an 8.7% increase in COLA last year, experts predict this trend will continue into 2024.
The reason this is happening is that Social Security has been adjusted annually since 1975 to account for inflation; FOX News business “The amount of benefits exempt from taxes has not changed for decades.”
“Increasing Social Security income not only means more Social Security recipients will pay taxes on their benefits this tax season, but also means more Social Security recipients will pay taxes on their benefits this tax season,” said Mary Johnson, director of Social Security and Medicare policy. “We expect taxes to make up a larger portion of the checks.” She is an analyst for the Senior Citizens Federation.
Tip: Social Security recipients should crunch the numbers to see if their benefits are taxable.
Here are the guides provided by the league:
- First, figure out your “total income.” Calculate your adjusted gross income for the year (this is line 11 in the diagram) IRS Form 1040), add half of your Social Security benefits for the year, plus any tax-free interest (this is box 8 on the chart) IRS Form 1099-INT). That's your total income.
- If you file a federal tax return as an individual and your combined income is between $25,000 and $34,000, you may have to pay income taxes on up to 50% of your benefits. Up to 85% of your benefits can be taxed if they exceed $34,000.
- If you file a joint return and you and your spouse's combined income is between $32,000 and $44,000, you may have to pay income tax on up to 50% of your benefits. Up to 85% of your benefits can be taxed if they exceed $44,000.
“If these thresholds had been adjusted for federal income tax brackets, the $25,000 individual filing status level would have exceeded $75,250, and the inflation-based joint filing level through December 2023 would have exceeded $96,300. “That would have been the case,” the league said. news release.
Still need help determining whether your benefits are taxable? click here For interactive tax assistant tools provided by the IRS.
