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04-07-2013, 05:41 AM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2011
Posts: 8,407
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New flash: Taxes on everything are going to increase.
Stuff that wasn't even taxed before will be taxed soon. Interesting though, how one area of tax impacts another area...accident or by design?
"...should five percent appear too small, be thankful I don't take it all...and you're working for no one but me..." (Taxman, Beatles)
__________________
Living well is the best revenge!
Retired @ 52 in 2005
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04-07-2013, 06:16 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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Quote:
Originally Posted by Tekward
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This isn't unprecedented. The way the phase out of PPACA subsidies work, for those buying their own policies the phaseout works like a ~15% additional tax in solidly middle class tax brackets (for every extra $100 you earn, you could lose about $15 in subsidy). And that ONE DOLLAR that kicks you over 400% of the federal poverty line is taxed (effectively) at over 100,000%.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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04-07-2013, 06:25 AM
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#4
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gone traveling
Join Date: Mar 2007
Posts: 559
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Quote:
Originally Posted by ziggy29
This isn't unprecedented. The way the phase out of PPACA subsidies work, for those buying their own policies the phaseout works like a ~15% additional tax in solidly middle class tax brackets (for every extra $100 you earn, you could lose about $15 in subsidy). And that ONE DOLLAR that kicks you over 400% of the federal poverty line is taxed (effectively) at over 100,000%.
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I thought the MAGI for subsidies used all SS.
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04-07-2013, 06:27 AM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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Quote:
Originally Posted by gerrym51
I thought the MAGI for subsidies used all SS.
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I'm talking about a different issue here, not how SS affects the subsidy. I'm just saying that we already have a situation in law where, while "direct" tax brackets aren't increased, the "effective" tax rate a new dollar of middle class income can be a lot higher than the 15% or 25% it now pays in federal income tax.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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04-07-2013, 07:19 AM
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#7
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Full time employment: Posting here.
Join Date: Jan 2008
Posts: 759
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04-07-2013, 07:22 AM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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The worst part about the taxation of SS benefits is that the thresholds are not indexed to inflation, making it a stealth tax increase year after year. When they were introduced in the 1980s, the thresholds were at reasonably comfortable levels of income. Now they are really not, and it will only get worse in the future.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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04-07-2013, 07:41 AM
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#9
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gone traveling
Join Date: Mar 2007
Posts: 559
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as i've posted before-there are good reasons to take ss at 62 as well as taking at 70.
since the taxable ss formula is not inflation adjusted it will hit more and more people just as the AMT did for 30 years before finally fixed.
t
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04-07-2013, 07:53 AM
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#10
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Recycles dryer sheets
Join Date: Jun 2012
Location: Central Ga
Posts: 230
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I have never seen it covered, but I have always wondered whether or not the taxes on SS are put back into the SS pot of money to extend its calculated life or if they are counted as taxes to be used in other parts of the federal budget.
__________________
If you want someone to believe in you - First you have to believe in yourself and then you go from there...
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04-07-2013, 07:58 AM
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#11
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Thinks s/he gets paid by the post
Join Date: Oct 2006
Posts: 4,629
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Quote:
Originally Posted by ziggy29
The worst part about the taxation of SS benefits is that the thresholds are not indexed to inflation, making it a stealth tax increase year after year. When they were introduced in the 1980s, the thresholds were at reasonably comfortable levels of income. Now they are really not, and it will only get worse in the future.
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Right. For planning purposes, I just assumed that 85% of our SS benefits would be taxable in every year. If we can get under that in a few years, that's gravy.
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04-07-2013, 08:02 AM
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#12
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Thinks s/he gets paid by the post
Join Date: Oct 2006
Posts: 4,629
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Quote:
Originally Posted by Tekward
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Yes, but ....
What can we do about it? The article doesn't give any numeric examples of effective strategies based on this observation.
The only general approach I can think of is to do some tIRA=>Roth IRA conversions before you start SS (if it makes for my tax bracket). I'm not sure exactly how I might use those Roth assets in the future, but I may see some possibilities for single year tax deductions some day.
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04-07-2013, 08:20 AM
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#13
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gone traveling
Join Date: Mar 2007
Posts: 559
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Quote:
Originally Posted by Independent
Yes, but ....
What can we do about it? The article doesn't give any numeric examples of effective strategies based on this observation.
The only general approach I can think of is to do some tIRA=>Roth IRA conversions before you start SS (if it makes for my tax bracket). I'm not sure exactly how I might use those Roth assets in the future, but I may see some possibilities for single year tax deductions some day.
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the other edged sword is ppaca(obamacare) since all ss is in it its a consideration in getting medical insurance subsidy.
things you do to avoid taxes in some areas may negate your subsidy in other areas-you can't win
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04-07-2013, 09:10 AM
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#14
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Thinks s/he gets paid by the post
Join Date: Nov 2012
Location: Madeira Beach Fl
Posts: 1,403
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Quote:
Originally Posted by Independent
Yes, but ....
What can we do about it? The article doesn't give any numeric examples of effective strategies based on this observation.
The only general approach I can think of is to do some tIRA=>Roth IRA conversions before you start SS (if it makes for my tax bracket). I'm not sure exactly how I might use those Roth assets in the future, but I may see some possibilities for single year tax deductions some day.
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+1
__________________
_______________________________________________
"A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do" --Bob Dylan.
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04-07-2013, 10:05 AM
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#15
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Thinks s/he gets paid by the post
Join Date: Oct 2010
Posts: 2,470
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My financial adviser, who's advice I follow to the letter Ms G. Says forget about it just stay with your plan, and we will just pay HI out pocket like we have for 8 years. But what Ms G hasn't realized is that after our HI doubles, we may need the subsidy. With great insight Ms G says, why doesn't Intuit have a fill in the blank program like Turbo Tax or Quicken. But my sweetie we may not know the final results until October. So Ms G says, better reason to forget about it. I think I will follow that advise.
__________________
For me experiences are not good or bad, just different
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04-07-2013, 10:15 AM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2009
Posts: 6,695
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Quote:
Originally Posted by Semiretired2008
I have never seen it covered, but I have always wondered whether or not the taxes on SS are put back into the SS pot of money to extend its calculated life or if they are counted as taxes to be used in other parts of the federal budget.
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I recall reading somewhere (maybe here, maybe in the SSA website, maybe somewhere else; sorry, I do not recall where) that those taxes are redirected into SS through some accounting entry which would, as you point out, extend its life.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.
"I want my money working for me instead of me working for my money!"
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04-07-2013, 10:35 AM
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#17
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gone traveling
Join Date: Mar 2007
Posts: 559
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Quote:
Originally Posted by scrabbler1
I recall reading somewhere (maybe here, maybe in the SSA website, maybe somewhere else; sorry, I do not recall where) that those taxes are redirected into SS through some accounting entry which would, as you point out, extend its life.
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since the government has no money no. ss keeps buying government bonds which they are supposed to redeem when necessary. since the federal government is broke what is is what is.
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04-07-2013, 11:26 AM
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#18
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Thinks s/he gets paid by the post
Join Date: Jun 2007
Location: near Canadian border and near Mexican border
Posts: 1,142
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__________________
Pigs get fat, hogs get slaughtered. That's my story and I am sticking to it.
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04-07-2013, 12:22 PM
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#19
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Thinks s/he gets paid by the post
Join Date: Oct 2006
Posts: 4,629
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Quote:
Originally Posted by Semiretired2008
I have never seen it covered, but I have always wondered whether or not the taxes on SS are put back into the SS pot of money to extend its calculated life or if they are counted as taxes to be used in other parts of the federal budget.
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Yes, most of the FIT on SS benefits goes into the SS Trust Fund.
Taxation of benefits
Of course, this has no direct impact on the total federal deficit.
However, it does have a legal significance. Under current law, SS is both permitted and required to pay current formula benefits as long as there is a positive balance in the Trust Fund. So, if the law isn't changed, this increases the amount of time that SS will be able to pay according to the current formula. That's significant for people trying to guess whether or not they will get SS benefits.
"But, Congress can change the law at any time, so that's irrelevant"? Technically true. However, I tend to look at how hard is is for Congress to agree on anything, and think the longer they take making a decision, the greater the chance that I'll get the current benefit.
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04-07-2013, 12:34 PM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2009
Posts: 6,695
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Independent, thanks for the link (and doing my dirty work and stopping me from scratching my head LOL!). I knew I saw it somewhere. The rest of the post was good, too.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.
"I want my money working for me instead of me working for my money!"
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