Trump: No taxes on Social Security

Yep.
Are Biweekly Payroll Income Taxes Calculated Differently? (chron.com)
No businessperson wants to get a message from an employee or the Internal Revenue Service saying that payroll taxes were calculated incorrectly. Payroll deductions are usually figured using a computer nowadays. However, computer systems can go down. If you know how to calculate deductions for single employees and figure take-home pay, you can get payroll out on time without a computer. In addition, understanding the process of figuring payroll tax deductions allows you to check for errors.

Establish Gross Pay
The first step required to calculate paychecks is to determine the employee's gross pay or gross earnings. For workers paid hourly, multiply the hours worked in a week by the hourly pay rate. If an employee worked more than 40 hours, multiply hours in excess of 40 by 1.5 times the hourly rate.

For salaried employees, base pay is generally the annual salary divided by the number of pay periods in one year. Add any bonuses, commissions or other taxable amounts to the hourly earnings or salary base pay.

Compute Social Security Deductions
Use the employee's gross pay with no deductions to calculate Social Security tax and Medicare tax. Multiply gross pay by 6.2 percent to find the amount of Social Security tax. If gross pay is $500, multiply $500 times 6.2 percent (0.062), which equals $31. As of 2019, Social Security tax is levied only on the first $128,400 of yearly wages.

Stop deducting this tax if the year-to-date gross pay exceeds this amount. The income cap changes periodically, so check IRS Publication 15, Circular E for the current amount.

Compute Medicare Deductions
The tax rate for Medicare is 1.45 percent of gross pay. There is no income cap for Medicare, so figure and deduct this tax on all earnings. Note that employers must pay a matching amount of Social Security and Medicare tax. When an employee's year-to-date gross pay tops $200,000, deduct the additional Medicare tax of 0.9 percent on all earnings in excess of $200,000. Employers do not pay a matching amount of additional Medicare tax.

Subtract Any Pretax Deductions
Not all of an employee's gross pay is subject to federal income tax. You must subtract the amount of withholding allowances and other deductions to find the taxable income. Compute the value of a withholding allowance by dividing the current amount of one personal exemption by the annual number of pay periods.

For example, one personal exemption was $4,050 in 2017 (personal exemptions is now gone under the Tax and Job Cuts Act). Divide by 52 to find the weekly amount, which works out to $77.88. Look on the employee's W-2 form and multiply the number of allowances claimed by $77.88.

In this example, you have $155.76 if the employee claimed two allowances. Subtract this amount from gross pay. Suppose the gross pay is $500. Subtract $155.76, leaving $344.24. You might need to subtract other nontaxable amounts as well. For instance, deduct contributions to a retirement plan and health insurance premiums.

Determine Federal Income Tax for a Single Employee
Single and married employees are taxed at different rates. Check the employee's W-2 form to find out which set of tax tables to use. For workers who file as single or head of household, use the employee single-rate tax tables.

Federal income tax is a progressive tax, meaning the percentage tax rates increase in a series of brackets as the taxable income rises. As of 2019, the tax bracket percentages were 10, 12, 22, 24, 32, 35 and 37 percent. Look on the appropriate percentage tax table in Publication 15, Circular E.

For a single employee paid weekly with taxable income of $500, the federal income tax in 2019 is $18.70 plus 12 percent of the amount over $260. This works out to be $47.50. The $500 gross figure is used here because personal exemptions do not exist for the tax year 2019.

Calculate Take-Home Pay
Calculate a single employee's take-home pay by deducting Social Security tax, Medicare tax and federal income tax from gross pay. If the gross pay is $500, Social Security and Medicare combined come to $38.25. The employee's federal income tax is $47.50. After these amounts are subtracted, the take-home pay comes to $414.25.

If you are in a state that levies a state income tax, follow state rules to calculate and deduct the state income tax. Don't forget to subtract amounts like contributions to a retirement plan.

You see? Once you have the gross pay figure, you deduct Social Security and Medicare, THEN you compute the income tax due.

Social Security withholding is not taxed when it is collected.
For the vast majority of Americans collecting Social Security, benefits are still not taxed unless the income thresholds are met. Even if income exceeds the threshold the tax required is minimal.

I have no issue with taxing Social Security benefits as they are being taxed now because they have not been taxed before. The tax mainly impacts upper income Americans, not your "cat food retirees".

 

agreed, they don't have any feedback as to the cost of government

I don't have much use for representation without taxation

 

LOL.

It would be a neat trick to cut taxes to zero, and then declare they can't vote because they don't pay taxes.

Anyway, as I said lot of people are not taxes enough, because zero tax is not enough. Either tax them at a lower rate, or impose VAT. Of course VAT would impact everyone, not just the zero folks.

 

I'm not an accountant, so I talked with mine about this just to be doubly sure. She just laughed and said, "Yes, indeed, your income is taxed for FICA on the 'front-end', and the only exception to this is that for income you put aside for a 401(k) which is taxed at the 'back-end', ostensibly for retirement."

ANYWAY, I'm hoping that maybe the day's news will touch on this topic which is of great importance to many Americans, and not focus just on the usual peripheral stuff.... It would be an enormous political coup for Trump if he's allowed to 'dangle this carrot' about ceasing to double-tax Social Security, while the 'Crats just sit there in oblivious silence....

 

But you figure Social Security on the gross! They take money away from you for these purposes on the 'front-end'! Yes, of course you have 'deductions' which will vary considerably from person to person, but the principle is the same. The government takes money out of your paycheck for Social Security each and every pay-period you work, and then it taxes you again when you are sent your earned benefits each month.

 

I understand your point. And maybe there is something that can be done about reducing this tax in a sensible way. But keep in mind that the first priority is to PROTECT Social Security. It is always a target for Republicans. So keeping it as is, though it might not look like it, is in and of itself an accomplishment if Republicans reach any sort of power in Congress.

Reducing taxes is always a great talking point for politicians... especially demagogues. But it's not as simple as just... saying it. When you reduce taxes, there are consequences. For example, SOMETHING has to be cut. And it impacts other areas of the economy. What we need to listen for is HOW they are going to cut those taxes. Trump did this in his administration, and the result was INFLATION. So some people happily spent some check they got in the mail, and praised Trump for it... not realizing that they would have to pay it back with huge interest in the form of the higher prices you saw after 2021.

 

You are essentially right, and I have noticed for a very long time that it's always REPUBLICANS who are always carping about Social Security. "W" Bush ran into a solid granite wall when he tried to float his "privatize Social Security" scheme... and 'Pub luminaries like Rick Santorum and Chris Christie literally wrecked their once-promising presidential aspirations by pushing initiatives to sabotage or cut earned Social Security benefits.

Whether anybody likes it today or not, SS is quite well baked-into nearly all Americans' retirement portfolios. And I can promise you that even though 'Boomers' are characteristically Conservative politically, nothing will make them vote for Democrats quicker than meaningful, fair-minded changes in taxation policies that legitimately put more money in their pockets! It's up to Kammy's people now to see if they can take some time aside from developing 'virtue-signalling' strategies to spend some time on crafting meaningful reforms that directly affect the 70+ million citizens who collect Social Security.

 

Since this thread isn't about the horserace of 2024, suffice to say that you are simply electioneering by trying to attach Trump to policies he's not running on.

 

Yes. The first thing done when figuring out the taxes is to take FICA and Medicare out of the gross. That money goes to dedicated accounts.
Understand?
THEN the withholding is applied to figure out the income tax.
So your FICA is not taxed when it is taken.
And unless you're "rich" your Social Security isn't taxed when you retire.
Your income has to be over $25K ($44K if filing jointly) before your Social Security is taxable.
And even then, only half of your SS is taxed.
It's a very small number.
Really.

 

It’s a good idea in principle. The problem is that SS is running out of money. A better idea would be to exempt SS from taxation for individuals and couples who are bringing in less than $150k from other sources. The money that is taxed from higher income people should be sent right back into the SS system to help keep it solvent.

If it wasn’t for the solvency problem, I would say I supported tax free SS for everyone.

 

SS wasn't supposed to be taxed and should not be.

 

You should as the Congressional appointed Greenspan Commission and Tip O'Neal and Howard Baker.

Then as now people decided the higher earners should have their benefits taxed to make it "fair".

 

It is absolutely salient and a necessary topic of discussion. How do you make up the shortfall in revenue?

And not good for the claimed benefit of the proposal.

 

Well SS revenue isn't really a problem. The solution to this problem is to not vote Republicans into office. They have been the ones crying doomsday for SS and every time the year of insolvency has been reached without the SS crisis happening.

What's more, Republican politicians have gone on the record as being supportive of the starve the beast method of ending social programs by making sure that the government doesn't have the budget to pay for it. In other words financial sabotage.

And as you can see, none of the above is related to the topic of tax free benefit checks.

 

This is interesting. Say I work for Bigbucks Corp., making a gross salary of $2,000 per month. I have no 401(k), no deductions of any kind. I just work for a salary, and get my paycheck every month.

Does the Federal Government not take mandatory FICA contributions out of my original $2,000 per month? I still have archived check stubs from long, long ago that shows it did.... My accountant tells me that it's the first thing that's calculated. It's deductions for Social Security, Medicare, et al. She says the other way to think of it is not as a "tax" but as a "deduction" -- but no matter whether you call it a "tax" (per se), or a "deduction" -- it's money out of your paycheck. It goes as a mandatory "contribution" to Social Security -- but under the current laws, your Social Security benefit is taxed afterward, when you get your earned retirement payout benefit.

So, the government takes money out of your paycheck when you earn it (call the process what you may), and then taxes you on your benefit payout. How is that not a "double-whammy"?

 

You do understand that INCOME taxes levied against Social Security benefits do not go into Social Security?
Its an INCOME tax.

 

We surely do agree about that! The tax that hits Social Security benefit payouts to retirees is a TAX, pure and simple. I would guess that it just gets thrown in with 'general revenue' or wherever our income taxes go....

 

It is. Why do you think Trump is proposing this idea? Trump thinks by proposing this, he can get seniors in masses to vote for him. But if the GOP has their way, whether SS is taxed or not, the SS will change, have substantial cuts, etc, and Trump knows this too. He is just not telling you this. Hence why the debate. It sounds nice, but if you look at the Republican Study Committee on their FY 2025 budget, it calls for substantial cuts to SS, especially SSI and SSDI, along with a flat rate on SS benetits. this will hurt the middle class the most, and to a greater extent, the lower-income classes who rely heavily on SS benefits to pay the bills after they have retired. Add to Trump's tariff plan of 10% on all imported goods and his other proposals, the middle class will get screwed big time while Trump is dangling the carrot for you as you slowly walk off the cliff of 10000 meters below.

 

No. You got it all wrong. Each box is taxed under the code for which it is designed. Box 1, gross pay for wages is specifically defined under 26 USC 3401 and its subsequent regulations. This defines the SS wage base, the medicare wage base, and the base for which income taxes are withheld.

Take-home pay is simply remuneration minus all deductions from that pay. Some of those deductions have benefits and consequences to that gross pay for income tax purposes. For instance, some pay is not taxed such as certain military benefits as part of your renumeration or certain employer benefits, called fringe benefits, are not taxed either. But federal income taxes are deducted from gross pay. Social Taxes are deducted from SS wage base. And Medicare taxes are deducted from the Medicare wage base, which is the gross pay BTW. If all gross pay, SS wage base, and the medicare wage base, they use the same figure under the code.

 

Yes it does. Your income tax from your gross pay would be based on the number of allowances on your W4. SS taxes would be 7.65% of that gross pay with the employer contributing the other half. Medicare taxes would be 1.45% with the employer contributing the other 1.45%. It is all based on the same wage base, $2000 per month. And if you receive SS benefits, then it is taxed as an income. Thus a double taxation rule applies. With dividends, that too can be double or tripple taxed. the tripple tax occurs with foreign dividends to the person. But with corporations who receive dividends, certain dividends, then a special deduction is applied where up to 100% is excluded from gross income for the corporate income tax. It is one of those "quirks" or loopholes in the tax code.

 

Yes, the revenue from the taxes on income, including what is made from social security in part goes into the social security trust fund. I’m not necessarily opposed to cutting the tax on social security, but this would likely require making up for the revenue loses in other areas. If the math makes sense and it doesn’t screw people over, I would support it.

 

I agree with your observations about this, in which you've done a good job of condensing the essential factors in this very important aspect 'tax' aspect of Social Security. I hope some of Kammy's campaign-designers read it, and then craft a feasible response -- and -- an alternate, superior idea!

Loved or hated, Social Security is literally welded into the retirement portfolios of all but the wealthiest of Americans, and no one should doubt that it can be the 'lever' to make or destroy any political candidate, whether a 'Pub or a 'Crat! Anyone who doubts that should look at the wreckage that was made of the political careers of notable 'Pubs' like Rick Santorum or Chris Christie AFTER they started carping and complaining about Social Security, and suggesting ways to 'means-test', cheat retirees, or cut the earned payouts!

 

Yes, SS is one of our most successful government programs. The original intent of FDR was for elderly people not to have to work in the later years of their lives. When it was created, very few people lived beyond 65 due to the hard work and medical limitations in those days. We have included into the retirement framework private retirement plans from defined pensions to all the defined contribution plans such as 40ks and IRAs of some amount. They too are popular, but for the middle class and above. Those who are below the middle class may rely on defined pension plans if they work for a large corporation that offers such a plan, or they rely solely on SS benefits for their income, which means they don't file. Thus, the Trump proposal won't affect them/. That is about half, maybe more, of all retirees who receive SS benefits. However, defined benefit plans are disappearing fast, very fast. Another interesting note is the Railroad Retirement Benefits, separate from SS. There you have the RRRB plan equivalent to SS, tier one, and the pension, tier two. And yet, Trump's proposal does not affect them and no one talks about the railroad retirement plan. That plan is solvent somehow, and they have more freedom on investing with the money that they do receive.

I will send my proposals to Ms. Harris Campaign. Maybe they will take a look at it and emphasize keeping SS. It will be a counter to what the Republican Study Committee proposes in their budget. I will also suggest to the Harris campaign to hammer both the GOP proposed FY 2025 budget when it comes to tax and budget piolicy. We shall see.

 

So in response to my charge that you are simply electioneering, you...continued. Study Committee, Project 2025, or any other document you want to pull up from the internet have little to do with what Trump is running on.

Harris has not given us her plan for Social Security either. Why is she hiding this? Does she plan to cut social security too? We don't know! We do know that you've posted a Social Security reform proposal that eliminates social security and I've proposed one that saves it, so I judge your sudden concern about Republican Study Committee plans as largely fake since you seem to agree with them.

 

Well I've said much the same thing.