Email from SSA

[kathyc2]

13 hours ago, Lee B said:

This link provides a history of the taxation of social security benefits:

 

The 1983 changes also made it so self-employed paid double the rate.  Before that it was 1.5 times rate.

The majority of cases where someone moves from 12% to 22% marginal rate is very close to when the max 85% becomes taxable. Those with less than 85% taxed and in a 12% marginal rate, pay an effective rate of 22.2% (12 x 1.85).

 

[Abby Normal]

12 minutes ago, kathyc2 said:

The 1983 changes also made it so self-employed paid double the rate.  Before that it was 1.5 times rate.

The majority of cases where someone moves from 12% to 22% marginal rate is very close to when the max 85% becomes taxable. Those with less than 85% taxed and in a 12% marginal rate, pay an effective rate of 22.2% (12 x 1.85).

 

The problem line to cross is when you're close to the limit but none of your SS is taxable, and you get some extra income. That extra income causes almost the same amount of SS to be taxable so it's like being almost double taxed on that windfall. 

A retired client won 4k playing bingo and paid so much tax on it that she said that she hoped she never won bingo again.