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Could retirees stop paying Social Security taxes?

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  • How do you know if you owe Social Security taxes? In North County Tribune we explain the formula you must follow to discover it

Social Security payments are taxable, perhaps not many retirees realize. The good news is that there is a bill that could change this situation.

Before we start talking about it, we are going to tell you that, starting in 2022, Social Security payments are taxable. To determine whether or not you have to pay them, you have to use a formula to find your combined income. The formula is: Combined Income = Adjusted Gross Income (AGI) + Nontaxable Interest + 1/2 Social Security benefits.

If the number that comes out as a result is greater than $25,000 dollars, then you are obliged to pay a part of taxes, regardless of your marital status, that is, this applies to singles, heads of families or qualified widowers, with or without dependents. .

For married couples, the limit is $32,000 if they file a joint tax return. To determine the exact amount you are going to pay, it will be variable, since it will depend a lot on your total income, but it reaches a maximum of 85% of your benefits.

Now, it must be clear that some states also tax Social Security benefits themselves. It is not a phenomenon that occurs at the level of the entire country, but rather everything depends on certain territories.

The bill that seeks to change all this has been proposed by Representative Angie Craig and has been given the name “You Earned It”.

“Social Security is a promise we have made to the American people: If you work hard and follow the rules, the dignity of a secure retirement is within your reach,” Craig said in a press release.

The proposal is that to make up for lost earnings, the Social Security payroll tax cap is raised from $147,000 to $250,000.

You must be clear that none of this can be taken for granted, since it is a proposal that will hardly be seen if it is put to a vote or not. If it becomes a reality, people with high incomes will be affected, since they will have to pay more Social Security taxes in their check each week.

For retirees it will be a success, since according to Craig, it will be a way to increase the net benefits as the government no longer takes a part of what corresponds to them.

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