With inflation skyrocketing, it’s no surprise that retirees are looking to find a job to make additional income. However, it’s important to understand that this action could cause an individual’s Social Security payments to be taxed.
Understanding Possible Taxes
For those who rely solely on Social Security benefits, these taxes are not an issue. But for many this is not realistic; because of this, many seniors have additional incomes to help.
Unfortunately, as soon as an additional income is brought into the equation, there’s a potential for an individual’s benefits to be taxed. This potential rests on the individual’s provisional income.
Calculating Provisional Income
An individual’s provisional income can be calculated. To do so, add half of the benefit payment to any non-Social Security-related income. There are a few exemptions to the formula, The Motley Fool notes.
Once the provisional income is calculated, it can be compared to the income threshold.
Income Thresholds
As SSA.gov explains, income thresholds vary depending on how an individual files their taxes.
If you file as single, a provisional income of $25,000 to $34,000 will allow for up to 50% of your benefits to be taxed. Any provisional income above $34,000 allows up to 85% of an individual’s benefits to be taxed.
For those who file a joint tax return, the income threshold is a bit different. A provisional income of $32,000 to $44,000 allows for the first tier of taxation (up to 50% of their benefits) while anything beyond that allows for the second tier.
Improving Financial Security
Due to this old and outdated reformation, it is easy to see how seniors may struggle financially, even while working in retirement. This unjust taxation must stop!
Seniors earned their benefits and deserve every penny. That’s why we at the Seniors Security Alliance are fighting to eliminate taxing Social Security benefits as income, as outlined in our groundbreaking bill.
This legislation, The Senior Citizens Bill of Rights, will create a more financially secure future for senior citizens. Find out how to help urge the politicians in Washington to pass the bill here.
