High Taxation On S.S. Benefits Slams Seniors

The tax on Social Security income has not been adjusted for inflation since it was enacted 23 years ago.

The law, aimed at taxing a portion of Social Security benefits for "high income" filers, already affects millions of middle-income seniors, who each pay thousands of dollars in additional tax as a result of it. And as baby boomers edge closer to retirement, it's certain to ensnare millions more, Mark Luscombe said, principal tax analyst with CCH, a Riverwoods, Ill.-based publisher of tax information.

The tax on Social Security benefits is triggered when a senior's wage, pension, investment and dividend income exceeds a set threshold. At that point, a senior who fills out a return by hand must complete an 18-line worksheet that ultimately determines how much of his or her otherwise tax-free Social Security benefits will become taxable. (Most tax software programs do the calculation automatically, so those who file that way may not even notice the extra tax.)

For a single senior, each dollar of income over $25,000 makes 50 cents of his or her Social Security benefits taxable. For married couples, that threshold is $32,000.

Miami Herald