The Social Security Fairness Act, aiming to increase payments for millions of Americans, eliminates two provisions that previously lowered payments for pension workers and their spouses. However, the increased payments could lead to higher tax liabilities for some recipients.
Some Social Security recipients could see higher tax bills now that a new piece of legislation was passed.The Social Security Fairness Act boosted monthly payments for millions of Americans, but with the higher checks could come additional tax burdens.The Act, which eliminates the windfall elimination provision (WEP) and GPO (government pension offset), will see around 3 million public sector workers, including police officers, firefighters and teachers, receive higher Social Security payments.
These two rules previously lowered monthly payments for seniors who worked for companies that also paid out pensions uncovered by Social Security in addition to their spouses' pensions. However, now that the WEP and GPO are gone, seniors receiving more in Social Security payments could end up with higher tax bills on their Social Security earnings.Currently, around 40 percent of people who get Social Security must pay federal income taxes on their benefits. But now that the Social Security Fairness Act is law, that number could go up. All seniors who file an individual tax return and have a combined income between $25,000 and $34,000 must pay income tax on up to 50 percent of benefits. Meanwhile, those with more than $34,000 in combined income will see up to 85 percent of their benefits taxed. Those filing a joint return will pay taxes on 50 percent of their benefits if making between $32,000 and $44,000. And if the joint combined income is above $44,000, 85 percent of the benefits may be taxable
SOCIAL SECURITY TAXES FAIRNESS ACT GOVERNMENT PENSIONS INCOME
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