Many Social Security recipients in the United States are in for a surprise this tax season as recent changes mean around 66 million Americans will be paying more to the IRS. The increase is linked to the 8.7% rise in Social Security payments last year, reflecting the Cost of Living Adjustment (COLA). While this may have seemed like positive news, the IRS is now claiming a share of that increase.
Tax Time Turmoil for Retirees: Outdated Thresholds Trigger Largest Increase in Social Security Payments Owed to IRS Since 1981!
Retirees will owe taxes on their benefits if their adjusted gross income, which includes 85% of Social Security payments, exceeds $25,000 for single filers or $32,000 for married couples. Despite regular increases in Social Security payments, the tax threshold has remained the same since 1984. Consequently, the amount retirees owe to the IRS has been steadily increasing each year.
The COLA in 2023 marked the most substantial increase since 1981, making this year’s tax increase the most significant jump experienced by retirees. The Executive Director of the Senior Citizens League, Shannon Benton, anticipates a substantial increase in the number of people paying taxes on their Social Security benefits this year.
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Tax Challenges Ahead: Remote Workers Face Double State Income Tax – Navigating the 2024 Tax Season with Expert Advice!
Not only retirees but also remote workers are facing potential challenges with taxes this year. Those working for companies in different states than their residence may encounter a double state income tax. States like New York tax individuals based on their employer’s location, even if the person does not physically work in that state.
The 2024 tax season commenced on January 29, with the IRS accepting and processing returns until the deadline on April 15. To assist taxpayers, the government’s free filing service, IRS Free File, is already open, promising to process most refunds within 21 days of submission. As taxpayers navigate potential increases in Social Security taxes and other complexities, seeking advice from tax experts is encouraged to optimize savings for retirement.