Today (February 12, 2021) marks the official start of tax season. This is the first day the Internal Revenue Service will begin accepting and processing 2020 tax year returns. The delayed start date for individual tax return filers gave the IRS time to program and test its processing system to ensure everything is working correctly after late year tax law changes provided a second round of federal stimulus checks and other benefits.
Before you file, it’s important to understand how Social Security affects your taxes. If you collect Social Security benefits you most likely will have to pay taxes on them. According to the Social Security Administration, about 56% of Americans pay taxes on their benefits – and that percentage is expected to go up because income tax thresholds for Social Security aren’t adjusted for inflation. A USA Today article revealed the income tax thresholds have been at the same rate for the past 25 years. One of the experts interviewed went so far as to call it a “covert tax”. Depending upon the recipient’s income level, anywhere from 50% to 85% of Social Security benefits may be taxable. That’s a lot of money for retirees living on a fixed income.
The Seniors Trust is doing all it can to protect and strengthen the retirement security of American seniors. One of the ways it will do this is through passage of the Social Security Expansion Act. This landmark piece of legislation seeks to reform Social Security the right way: by expanding and strengthening benefits proven to reduce senior poverty and improve retirement security, and by extending the solvency of this crucial program.