Even after years of work, senior citizens are finding their benefits are taxed as income. These taxes could occur in a few ways, either the individual earns more than the income limit set for the year, or they are residents within a state that taxes Social Security benefits.
Federal Government Taxing Benefit Payments
According to The Motley Fool, 50% of senior citizens do not get to keep the entirety of their Social Security benefit payments. Why is this?
Simply put, the federal government has a set amount senior citizens can earn in addition to their benefits before being subjected to taxes. However, if anyone finds themselves earning more than this limit, they will find up to 85% of their Social Security benefits taxed as income.
This is problematic in years when inflation isn’t running amok as individuals are seen taking on more and more financial responsibility, even with fixed incomes. However, with the inflating costs seen this year, this additional tax can very easily be catastrophic for senior citizens.
And if that wasn’t enough, there are state governments who have decided they want a share of seniors’ money as well.
States Taxing Benefit Payments
According to this article, there are 13 states that will tax Social Security beneficiaries. This tax is in addition to any income tax placed on the beneficiary by the federal government for earning more than the income limit.
The article notes these 13 states to be:
- Colorado
- Connecticut
- Kansas
- Minnesota
- Missouri
- Montana
- Nebraska
- New Mexico
- North Dakota
- Rhode Island
- Utah
- Vermont
- West Virginia
Of course, the specific rules about taxing benefits vary depending on the state. The article also notes that there are even some states in the process of phasing out these taxes.
However, it is important to keep the information in mind as a retiree—living on a fixed income is difficult enough without the federal and local governments eating away at the limited income.
Regardless of what level of government is doing it, taxing Social Security beneficiaries is simply wrong. After years of working and contributing to Social Security, senior citizens have earned every penny of their benefit payments.
Help Us Help Seniors Nationwide
It is time for this to end. We are calling on Congress to pass The Senior Citizens Bill of Rights and provide senior citizens nationwide with more financial security. This bill guarantees seven rights to seniors nationwide, helping seniors achieve more financial security.
Join us in urging politicians in Congress to pass this essential bill now.
