ECONOMY & WORK
MONEY 101
NEWS
PERSONAL FINANCE
NET WORTH
About Us Contact Us Privacy Policy Terms of Use DMCA Opt-out of personalized ads
© Copyright 2023 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.
MARKETREALIST.COM / ECONOMY & WORK

Seniors Paid $50.7 Billion in Income Taxes on Social Security in 2023; Will It Rise This Year?

A bill is currently worded which says that the federal taxes on Social Security income would be eliminated beginning in 2025.
PUBLISHED MAY 29, 2024
Cover Image Source: Social Security (representative) | Getty Images | Kevin Dietsch
Cover Image Source: Social Security (representative) | Getty Images | Kevin Dietsch

A new report found that Social Security has taken in more than $1.35 trillion in 2023 out of which the majority was paid by tax workers. Seniors paid a combined $50.7 billion, and the figure is expected to be even higher in 2024. These figures are set to rise in 2024. So if you are one of the people claiming benefits this year, it's recommended you don't wait until tax time to find out the amount you need to contribute. Yes, if you didn't already know, retirees are also subject to taxation. Large benefits increase the likelihood of owing more benefit taxes. This is why it's important to look at ways to bring down the taxes, and this needs a bit of preparation. 

Image Source: Pexels|Photo by Kampus Production
Retirees are also subject to taxation (representative image) | Pexels|Photo by Kampus Production

For starters, one needs to evaluate if they will owe social security benefits this year and then needs to budget for them. Those with a big bill at the end of the year can request that the government withhold money for taxes from their social security checkup. If you are afraid of getting a big bill at the end of the year, then you can request the government withhold money for taxes from their Social Security checks upfront. For this, all of you have to do is fill out the form.



 

Another thing that you can do is to delay claiming the social security benefits. You see as long as you draw a salary, $1 in benefits will be deducted for every $2 you earn above the annual limit, which is $22,320 for 2024. This will continue till the year you reach full retirement age when the reduction falls to $1 for every $3 above the higher limit of $59,520, as per SCHWAB.

You could also consider Roth conversion, which is when you reach the age of 73, you take the required minimum distributions, which is RMD annually from your tax-deferred accounts, including both IRAs and 401(k)s which are as well-known taxes as regular income. This means you won't need to pay taxes on withdrawals from both Roth IRAs and Roth 401(k)s, as long as you're more than 59½ or older.



 

This is why converting to a Roth could help lessen the taxes to a huge extent. On top of all this, it is also important to plan your investments properly. Most investments generate taxable income in the form of interest, dividends, or capital gains and therefore it's possible to ensure growth in the overall portfolio and also exempt taxes in some cases.

For most retirees, Social Security taxes are inevitable but understanding how the benefits may fall in your portfolio is important as it may help you minimize the overall tax bill. Having said that, a proposal to end federal tax is looking to take shape. A bill is currently worded which says that the federal taxes on Social Security income would be eliminated beginning in 2025. “It's a tax cut for seniors and a way to ensure more Americans can depend on the Social Security benefits they’ve earned,” Rep. Craig said in a release.

MORE ON MARKET REALIST
It's always nice to share your success with your loved ones, even when they're not present.
13 hours ago
Carey accidentally gave away a free guess to the player in the 10 chances game, helping her win.
14 hours ago
The child came up with the idea out of his own love for coffee that he wanted to enjoy minus the effects of caffeine.
15 hours ago
The two had a very old and special bond and the emotions were too much for Carey to contain.
16 hours ago
No one wants to be booed when they're on live TV, especially if it is a game show.
1 day ago
It's not every day that you get a rockstar to teach you an iconic guitar riff on "The Price is Right."
1 day ago
The models usually are very supportive towards each other and share a good relationship.
2 days ago
It's almost like there's something wrong with the new host every other day for certain fans.
2 days ago
You don't always get to rock out on a daytime TV game show but when you do, it is epic.
2 days ago
There was a point during which the investors did not believe the entrepreneur had it in him.
4 days ago
The guest thought that it was about 80 to 100 years old and was worth around $1,000.
4 days ago
There was a point where she could have lost her company entirely or a major part of it to a shark.
6 days ago
The host of "The Price is Right" made a lot of people's dreams come true that day.
6 days ago
The host handled it very well and fans also appreciated him for the same in comments.
7 days ago
The "Family Feud" host showcased one of his many talents, leaving the audience in awe.
7 days ago
George Gray has been a beloved member of "The Price is Right" cast for more than a decade now.
7 days ago
The producers made them kiss three times during season six while they tried out different pitches.
7 days ago
Bob Barker also made a brief come back as host years after his retirement from the show.
Mar 5, 2025
'The Price is Right' became the longest-running game show last week when it reached the milestone of 10,000 episodes.
Mar 4, 2025
The item is an integral part of the history of world literature and was quite an intriguing find.
Mar 4, 2025