Just like the rest of the citizens of the United States, Social Security beneficiaries must take into account the taxes to be paid in each year’s Tax Return. These types of payments are key to having a society in which there is a functioning Social Security system.
However, it is true that most Social Security beneficiaries do not pay taxes. The reason is very simple, and that is that we find that a large portion of retired beneficiaries do not earn enough money from their benefits to have to pay taxes.
However, there are many of these Americans who will be paying taxes starting next year. It will all depend on certain salary limits that they could cross. The important thing in these cases is to be very aware of the monthly income we have to avoid unpleasant surprises.
If we take into account that the taxes are something obligatory we will have the mental notice that we must always check if we must pay them or not. It is different to collect just a Social Security check, which rarely causes us to have to pay any taxes. Do you know if you have to pay taxes every year?
SOCIAL SECURITY TAX INCREASE
With the beginning of the new year 2024, it is possible that some citizens who collect Social Security will have to pay taxes. But this will be only in the case that we collect some extra money in addition to our check.
Beneficiaries who only have a retirement check will not have to pay, in most cases, any money in taxes. This is because the income is usually not large enough to have an annual tax liability.
Because of the COLA increase, it is true that many citizens who are Social Security beneficiaries may cross a threshold that they did not cross before. And since those thresholds have not changed in years it is possible that some of those beneficiaries may have to pay part of their retirement in taxes.
The best solution to avoid problems with this whole tax issue is to contact an expert tax advisor. This will ensure that there are no surprises when it comes time to pay our taxes.
HOW MUCH WILL RETIREMENT INCREASE IN 2024?
As of January 2024 the COLA will cause the checks to increase by 3.2%. Because of this COLA some citizens will collect a little extra money that will cause them to have to pay taxes, as we have already discussed.
The maximum Social Security check will go from $4,555 per month to $4,700 per month. Add to that a monthly check for working or some other activity and it is possible for the retiree to lose some money.
In any of these situations, a financial advisor is the best idea. Otherwise, we will be in serious financial trouble, since we could lose a large part of our benefit not only in taxes, but also in other expenses.