SOCIAL SECURITY MAY BE CUT IN FUTURE

SOCIAL SECURITY MAY BE CUT IN FUTURE

Social Security may be cut in future. Even though the Congress and past President's have raided the Social Security Trust fund, it is not in danger of becoming insolvent. Yet experts are predicting, that without any additional capital contributions, the amount paid by Social Security to retired workers, may be reduced within 13 years. Candidate Biden offered ways to shore up the Trust Fund. In 2023, Social Security's 12.4% payroll tax is applicable to earned income between $0.01 and $160.200. "Earned Income" mans wages and salary but not any sort of investment income. Approximately 94% of all working Americans earn less than the maximum IRS taxable earnings cap, the $160,200 figure. For the other 6% of workers, earned income above this $160,200 level is exempt from the payroll tax. Social Security may be cut in future.

President Biden would create a doughnut hole between the maximum taxable earnings cap and $400,000 where earned income would remain exempt, as well as reinstate the payroll tax on earned income above $400,000. Since the maximum taxable earnings cap tends to rise over time with inflation, this doughnut hole would eventually close decades down the line. The immediate increase in payroll tax revenue should push back the asset reserve depletion date of the Trust Fund. The other change Biden proposes is that the Consumer Price Index for Urban Wage Earners is used to determine Social Security's annual cost of living adjustment. Yet the people that are used to make this determination generally are not receiving a Social Security benefit. Biden wants to change it to the Consumer Price Index for the elderly. That is a better way to determine the yearly increases. If you have questions about the cost of living to Social Security, contact a good Tax Resolution Company for details. If you dipped into retirement accounts during the Covid Pandemic, you may qualify for Tax Relief passed by Congress, which is better than a IRS Wage Garnishment . Call our Tax Resolution firm for details.