Form 1040 instructions (1984) - "Beginning in 1984, social security benefits you receive may be taxable in some instances. Social security benefits include any monthly benefit under Title II of the Social Security Act or a Tier I railroad retirement benefit."
One-half of benefits along with nontaxable interest are added to other components of Adjusted Gross Income. If that sum exceeds $25,000 (single person) or $32,000 (married filing jointly), benefits start becoming taxable. Up to 50% of benefits could be added to taxable income.
In 1994, "if your income, including one-half of your social security benefits, is over $34,000 if single (over $44,000 if married filing jointly), more of your benefits may be taxable."
The $25,000 (single) and $32,000 (married filing jointly) thresholds still apply. The difference was up to 85% of benefits could be added to taxable income.
The 50% treatment made some sense. For an employee, half of the Social Security contribution was paid by each - worker & employer. The excess over 50% being taxed represents double taxation.
Self-employed individuals and the self-employment tax they pay is another topic - suffice to say, they pay dearly.
If Congress were to look at raising the $25,000 & $32,000 thresholds (been there since 1984) and if not eliminating the 35% treatment, maybe raising those thresholds also - that would be a welcome move, as more & more seniors are getting hit with taxed SS benefits
When it comes to government they are only interested in their pot of gold. They keep inching away at Social Security and adding more cost. Screaming we are broke. When I hear an elected official mention how SS is broke I get mad. Now with all that being said, they are looking for a backdoor way of taking what is ours to begin with. They don't take into consideration that people are working sick to make ends meet. Drug expenses are the same if you had never has insurance because they allowed the big phama to raise the price of the drugs. Electricity has tripled and higher in states. They have their fine retirement and insurance but are ready to charge us for trying to live an independent lifestyle. The states has to take up these expenses and that is higher taxes for us paying. We need a COLA like they do, we should not ever be taxed on SS after someone reaches the age 65. Government has gotten so controlling it is sickening.
