Repeal of taxability of Security Payments for Senior Citizens

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This issue is to ask that an injustice in the tax code to be corrected in the reform that will be happening this year. It deals with Code Section 86 which deals with the taxability of Social Security Benefits on seniors. Senior Citizen have tried to save for the future. They hope and pray that their pension fund, and Social Security Benefit will give a comforts retirement. Seniors are overwhelmed now when it comes to cost of food, housing, medical and prescription drugs.  Many States in the union do not tax Social Security payments for their State income tax.  Thus, my suggestion is the Code Section 86 be repealed in entirety.

However, if this does not happen, it should be updated. Code Section 86 was put into law on April 20, 1983 It became effective for all tax years after 1984.It reads as follows:

Social Security Per IRS Web site:

https://www.irs.gov/uac/are-social-security-benefits-taxable

Tax Formula.  Here’s a quick way to find out if a taxpayer must pay taxes on their Social Security benefits: Add one-half of the Social Security income to all other income, including tax-exempt interest. Then compare that amount to the base amount for their filing status. If the total is more than the base amount, some of their benefits may be taxable

Base Amounts. The three base amounts are:

$25,000 – if taxpayers  are single, head of household, qualifying widow or widower with a dependent child or married filing separately and lived apart from their spouse for all of 2016
$32,000 – if they are married filing jointly
$0 – if they are married filing separately and lived with their spouse at any time during the year. 
Maximum taxable part. Generally, up to 50% of your benefits will be taxable. However, up to 85% of your benefits can be taxable if either of the following situations applies to you. 

The total of one-half of your benefits and all your other income is more than $34,000 ($44,000) if you are married filing jointly).

 Proposed Ideas:

1) Repeal totally


2) If not repealed, the exclusion for Married filing joint should be increased from $32,000 to $50,000 for 50% rate. (Single rate $25,000 x 2 = $50,000 or new married exclusion) . If not repealed, the exclusion for Married filing joint should be increased from $34,000 to $68,000 for 85% rate. (Single rate $34,000 x 2 = $68,000 or new married exclusion) .


 Since 1984 to 2017, the consumer price index has increased by 134.6%. Each year, Revenue Procedures announce increase in rates for various other parts of the tax code. It includes increases for Tax Tables, Exemptions, Child Tax Credits and many more items.

 
For a listing of the items, please see the following:

Revenue Procedure:  2015-53 https://www.irs.gov/pub/irs-drop/rp-15-53.pdf

Revenue Procedure: 2016-55  https://www.irs.gov/pub/irs-drop/rp-16-55.pdf

However, there has never been an adjustment due to inflation for Code Section 86.

A paper was completed in 2015 which addresses the inflation issue. https://www.ssa.gov/policy/docs/issuepapers/ip2015-02.html

Past changes to tax law have benefitted families with children substantially by increasing exemptions, child tax credit, earned income credit, and college credits. It is now time to help out the middle class elderly people by repealing the tax on Social Security or at least make it fair and equitable based on changes in the economy of the United States over the past 33 years.

 If not repealed,  the  50% single taxable new rates with Consumer Price Index should be $33,650.00. ($25,000 x 134.6%), and the married filing joint should be $67,300 ($33,650 single updated rate X 2). The 85% single taxable new rate  be $45,800.00. ($34,000 x 134.6%), and the married filing joint should be 91,600.00 ($45.800 single updated rate X 2).

 

 

 

 

 



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