When Are They Ever Going to Update Taxable SS?

[ddoshan]

When on earth are they ever going to update that 30 year old 25K 32K threshold as to when some of a taxpayers SS becomes taxable. I could foresee down the line when the filing requirements for a married couple is say 28,000 dollars. But down the road they have say 15K in pension earnings or whatever and between the two 40K in SS and viola need to file a return. It's already getting dangerous when trying to tell folks what the filing requirements are. You tend to just give them the one number without potentially factoring in SS benefits received.

[Nashville]

Indexing is left behind

When indexing was adopted during the Reagan administration it was only for tax brackets, filing status, and std deduction. Everything else was left static, including such obvious things such as babysitting credits, alternative minimum tax, taxability of SS, etc.

However, at the time, the thresshold for medical deductions was only 3% of AGI. Then it went to 5%. Then to 7.5%, now and eventually to 10%.
So in addition to failing to index the abovementioned, they actually "reverse-index" the medical deduction. In other words, the government is not going to do anything to control the rising cost of medical but they sure don't intend to pay their share of it.

Sorry if any supporters of Obamacare were deluded into believing the government was going to stop the rising cost of healthcare. How could it happen if the largest corporations were at the table helping to write the law back when it was passed?

[Bees Knees]

There are numerous tax provisions that are not indexed for inflation. The Child Tax Credit AGI phase-outs, the American Opportunity Education Credit AGI phase-outs, the Tuition and Fees deduction thresholds, the 3.8% Net Investment Income Tax thresholds, and the 0.9% Additional Medicare Tax thresholds are other examples where there is no indexing. Up until last year, AMT exemptions were not indexed for inflation either. Keep in mind that when Congress has to change a law to introduce indexing to a particular provision, it counts as an increase in future budget deficits. Or, another way to look at it is the lack of indexing means there will be automatic increases in tax revenue collections for future year budget projections.

[oceanlovin'ea]

my theory

This is just my theory, but Congress usually makes changes when they affect their lives. If I am not mistaken, those in Congress do not receive Social Security. They get a civil service pension, which is taxable. Why would they make a change in the limitations on something that won't help them. Since I began doing taxes in 1984, the figures have been the same.
Most of them do not have children in day care anymore. Again doesn't affect them. It costs at least $100 a week for one child in day care. That is $5200 a year. Yet only $3000 can be used to get a credit and the credit is only 20 to 30% of that amount. Really not fair to families.

I'm sure many will disagree with this but as I said it is my theory.

Linda, EA

[Burke]

Oh, you are right about that theory. Where do you think they came up with the $500K exclusion for sale of a personal residence (MFJ)? Well, guess what the average sale price of a home in DC was around that time? You betcha.

[TAX4US]

You really want to see one. When was the last time a schedule r actually worked?

[FEDUKE404]

Another one

I'm still intrigued that the annual maximum allowable net Schedule D loss has been stuck at $3k for at least a few decades. . . .

FE

[TaxGuyBill]

I'll add some more to the list:

$25 limit for Gifts
14 cent per mile for charitable mileage.

[taxmom34]

You really want to see one. When was the last time a schedule r actually worked?

in the 30 plus years of tax preparation I never had a schedule R work

[Burke]

Me either. In fact I quit checking years ago.

[Justataxguy]

And then there is NY state's property tax credit which is also available to renters, but only for those that make $18000 or less per year. Been that way since I started in 2002. VERY few qualify, and if you only make $18k in NY you can't hardly afford rent let alone the property taxes here!

[Roland Slugg]

I have thought about the "frozen" social security limits many times. As others point out above, there are several other limitations and rates that have not changed in a long time, but the social security limit is different IMO. Unlike most other static amounts/rates that are relatively small and don't affect many people, the taxation of social security affects a fairly large $$$ amount on a LOT of taxpayers' returns, making it a very significant issue for many.

I believe Congress should make a one-time change in the social security taxation points ... none/50%/85% ... and that change should be significant. Then it should be handled the way the AMT limits are handled now ... finally!! ... with COLA indexing annually.

[JohnH]

Well, yeah, but remember they have to make it "revenue neutral". Most likely by adding more preparer penalties for honest errors or administrative defects on EIC, even when the net result is correct....

[taxea]

You really want to see one. When was the last time a schedule r actually worked?

Kudos for your comment...I have never seen it work. As for the SS issue...ask your Congress person.

[jsamans]

This is just my theory, but Congress usually makes changes when they affect their lives. If I am not mistaken, those in Congress do not receive Social Security. They get a civil service pension, which is taxable. Why would they make a change in the limitations on something that won't help them. Since I began doing taxes in 1984, the figures have been the same.
Most of them do not have children in day care anymore. Again doesn't affect them. It costs at least $100 a week for one child in day care. That is $5200 a year. Yet only $3000 can be used to get a credit and the credit is only 20 to 30% of that amount. Really not fair to families.

I'm sure many will disagree with this but as I said it is my theory.

Linda, EA

You are mistaken: Congressmen did not participate in Social Security under the Civil Service Retirement System (CSRS), but enrollment in that system closed in 1983. All Congressmen elected in 1984 and thereafter have been covered by the Federal Employee retirement System (FERS), which includes Social Security as a component. (refs: FactCheck, Snopes, Senate.gov)