Author: Joe Draus
FROM 1982 SOCIAL SECURITY TAX REFORM:
Go to US tax code, Social security and tier 1 railroad retirement benefits.
The Base Amount for your Filing Status:
$25,000 if you file as single, head of household, or qualifying widow(er)
$25,000 if you file as married filing separately and you lived apart from your spouse all of
the tax year.
$32,000 if you file as married filing jointly
$0 if you file as married filing separately and you lived with your spouse at any time during
the tax year.
AMMENDMENTS:
Second tier Base Amount is:
$32,000 if you file as single, head of household, or qualifying widow(er)
$32,000 if you file as married filing separately and you lived apart from your spouse all of
the tax year.
$44,000 if you file as married filing jointly.
Included in this base amount are non taxable interest, and half of your Social Security
benefit. So a senior couple with $25,000, in combined, annual Social Security income would have $12,500 of that added into their total income level, meaning that if they earned only $19,500 in other income, their government retirement benefits would become taxable. Though the federal government has taken great pains to eliminate so-called marriage penalties in the tax code for most filers, the marriage penalty still slams seniors. That's because the thresholds for taxing Social Security income for married couples are only slightly higher than the thresholds for singles, and every dollar you make above the threshold isn't taxed as $1; it's taxed as $1.50 or $1.85. Have you noticed the "base amount" remained the same since it's inseption in 1984! The following is where the third rail gets bypassed. Created on ... June 09,
2006
INTRODUCTION:
For any one not receiving Social Security at this time, but will be receiving it in the future and those receiving their benefits but not paying tax on them should pay attention to the following information. You will be caught in the trap eventually.
Until I started drawing Social Security, I wondered why they would have a line on the 1040 tax form for "NON TAXABLE INTEREST," Well! I found out, it increases the tax you pay on Social Security Income, and they also get to tax your tax exempt interest. After looking into this tax, to my surprise I could see why the Tax
Code was written the way it was! Yep, to eventually tax all Social Security Income
of the middle class. The huge amount of revenue being generated is
something even the conservative politicians do not want to see come to an end.
Now that the Baby Boomers are on the verge of receiving Social Security, the
revenues will be even greater.
The only way I know to get Tax Relief is, letting your Congressmen and Senator's know you would like them to make the changes in the law! The changes we would like to see made are outlined in the petition letter sent April 20, 2006, to Kentucky Senator's and 2nd District Congressman. You can read the petition in the Links to communications. Be prepared for a lot of lip service. (As is demonstrated in my communications with them.)
Communications from:
Senator Bunning (R.) KY, Senator McConnell (R.) KY, Congressman Lewis (R.) KY...click on the names in the LINKS Column to view the letters.
Our officials in Washington, Republicans and Democrat's alike, finally figured a way to bypass the third rail in "Taxing Social Security". There is only one of Kentucky's elected law maker's, that is willing to address this travesty. That would be Senator Jim Bunning, but he is only interested in eliminating the 2nd tier. Please take the time to contact all Representatives and Senators by going to (Representatives) and
(Senators)
and let them know where you stand. Kentucky residents may use
following to
(Contact
Senator Jim Bunning), or
(Contact Senator Mitch McConnell),
(Contact Representative Ron Lewis KY 2nd District), or any other of the 435 representatives.
How much income you can have before 50% of your Social Security benefit becomes taxable is
known as the Base Amount. The base amount is determined by law and is not adjusted
annually for inflation.The base amount that you use to determine the taxability of your
Social Security depends on your filing status. Your first tier Base Amount is:
In 1992 the Clinton administration included this 2nd tier, increasing the taxable amount
to 85%.
THE EFFECTS OF INFLATION:
In 1984 the Base amount of
$25000 is equal to $46,190.69 in 2006 dollars, $32,000 is equal to $59,124.09
in 2006 dollars, and 44,000 is equal to $81,295.62 as converted by Federal
economic data. Conversely $32000 in 2006 dollars, would have been the same as
$16000 in 1984. Go to Federal Reserve
Bank. I am sure you get the idea.
IRS STATISTICS ON
INCOME:
Reveals that from 1990 to 2003 the amount of individual returns
reporting Social Security Income Taxes went from 5,082,575 to 10,875,002 and
Revenues went from $19,686,539* to $97,768,201*. Latest update 2004 figures,
returns are 11,825,356 and Revenues are $111,778,572*. (Thats BILLIONS). Now tell me who is the largest recipient of Social Security? Would it be the elected officials in Washington? Do not believe them when they say it goes back to Social Security Fund, that fund does not exist after they rolled it into the General Fund to make it look as if the deficit had been reduced. Use the link below to take you to Table 1 in the historical section of the SOI Bulletin. On lines "Social Security benefits in AGI: [14]", you will see the social security benefits included in the computation of total income. Go to IRS open the file and scroll to lines "Social Security benefits in AGI: [14]". Good reading.
Footnote: *Money amounts are in thousands of dollars.