Section 2301 of the Covid-19 response bill passed by the Senate and likely to be passed by the House of Representatives, gives employers temporary relief from payroll taxes, including the F.I.C.A. tax. However, part (i) of §2301 requires a transfer of funds from the Treasury to the Social Security trust funds to make up for the lost revenues.
Question: will the tax laws also be changed so those receiving social security retirement, survivors, and disability benefits do not have to pay any federal or state income taxes on those earned benefits?
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ReplyDeleteIn the bill? No.
Eventually? Maybe, although I'm not sure how helpful that would be. Workers don't pay income tax on earnings paid into social security, so it is taxed once benefits start getting paid. It's basically just a multi-decade delay in income. But the advantage of the current structure is, workers are in large part facing a significantly higher tax burden than retirees/disabled folks on average. So shifting the timing of the tax is actually an advantage for both the workers and retirees/disabled.
I imagine if congress were to actually do this, the fiscal hawks would just make the tax apply at the outset, which would eliminate the tax burden on the disabled (who almost certainly already fall below the taxable threshold) and retirees (who at least on average are facing a low tax burden), but raise the tax burden on workers (who are facing a higher tax burden on average).
A bigger issue is that I believe the $1200 checks go to people based upon their tax returns and many Social Security recipients don't file tax returns so they would be excluded. If Congress wants them to get stimulus checks they would need a way to identify them perhaps through 1099s.
ReplyDeleteIve been wondering the same thing how r we getting it. Also if one gets ssd and the wife dont work and is filing 4 ssi will they get any of married benefit
ReplyDeleteFrom what I've read, the 1099's from SSA trigger a check if due.
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