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Opinion

Ask Rusty – About Federal Taxation of Social Security Benefits

Dear Rusty: Why are my Social Security benefits being taxed at all? The Social Security FICA payroll taxes taken out of my paycheck while I was working were paid with taxable income. Signed: Disgruntled Taxpayer Dear Disgruntled Taxpayer: Many Americans share your belief that federal taxation of Social Security benefits is unfair because we pay into the program through payroll taxes on our taxable earnings. Unfortunately, Congress took a different view in 1983 when taxation of Social Security benefits was first enacted at a time Social Security was having financial issues. Congressional logic back then was that a beneficiary only personally pays 50% of the Social Security contributions made (the other half is paid by the employer) so, since your Social Security entitlement was only half paid for by you and the other half by your employer, the portion of your benefit attributable to your employer’s contributions should be taxable. So, it’s that other half – the portion of your benefit which resulted from employer contributions - which the 1983 Congress decided should be taxed. So, starting in 1984, if a beneficiary’s overall annual income from all sources exceeded $25,000 for a single filer or $32,000 for those filing married-jointly, half of that person’s Social Security benefits became part of their income taxable by the IRS.

Ask Rusty – Nonagenarian war vet asks about extra credit for his service

Dear Rusty: I’m turning 95 this year and am caretaker for my wife in our 70th year of marriage. I served before 1968 (1951-53) during the Korean War. How do the “special extra credits for military service” work for me? Is it retro-active? My wife, who only worked a short time, gets half of my Social Security so would it affect hers, too? Signed: Korean War Veteran Dear War Veteran: First, I want to express my gratitude for your wartime service to our country and I also applaud your 70 years of marriage. Thank you, and congratulations!

Ask Rusty: Will opening a joint account affect my disabled father’s SSI?

Dear Rusty: I live in Michigan and my senior disabled father lives in rural Kentucky. His income is part Social Security and part disability. I talked to a local credit union near his home and explained I would like to open a joint account. They said as long as he comes in with his ID it’s possible. My question is - will adding money to our joint account affect his SSI and disability? Signed: Caring Daughter Dear Caring Daughter: First, I need to clarify that there are two types of disability programs administered by the Social Security Administration – Social Security Disability Insurance (SSDI), and Supplemental Security Income (SSI).

Augusts with Tears

Usual readers-- both of you, and a few relatives who sometimes read to see if I “got it right”--may remember that a month ago, I decided to put my “quill back in the goose” until September. A few cool days in New Mexico beckoned, and off we drove to the Land of Enchantment, neither footloose nor even close to fancy free, as it turned out.