Social Security Changes

[Dick Noble]

It is my understanding that exes can collect on either your SS or their own (which ever is the greater) only if they have not remarried. Has this changed?

[faye]

The trouble with the social security system is money that has been taken outof the ss trust fund and (moderator edit) the biggest problem is welfare. We have women in our area that have babies as a way of making a living..each child's benefit is over 500 dollars, plus the medicaid for each child,plus the food stamps for each child, plus the free lunch program for each child and the list goes on. In our community we had a summer lunch program for children paid for by taxpayers and an audit revealed the majority of the lunches were not going to the children but to adults, the administrators of the program were embelishing the number of lunches the children were receiving, allowing adults or workers with the program to take home the food and paying hefty salaries for work that was not done, this is just one program, just imagine how many programs such things like this is going on. Social security is not an entitlement program for people that have worked and contributed to the system, welfare for people that wont work, wont go to school, and are constantly thinking someone owes them something is the problem with our country and the lack of funds for social security.

[JimM68]

Originally Posted by wnytaxman

Included in there was making S corporation earning subject to SS tax. My business is an S corp so I would be hit with it. I still think it is a fairer way to solve the problem..

How exactly would this be done?
Periodic witholding based on last years K1?
That K1 is nearly half our income, that would be a huge tax increase.
Would the totall SS tax still be capped?

Someday I"ll get caught up on this thread...

[wnytaxman]

Originally Posted by JimM68

How exactly would this be done?
Periodic witholding based on last years K1?
That K1 is nearly half our income, that would be a huge tax increase.
Would the totall SS tax still be capped?

Someday I"ll get caught up on this thread...

Jim, what has been proposed is that S corp income would be subject to SS if it is personal service income. For example, accountants, lawyers, doctors, etc. The cap would still be there at $110,100 so if the W-2 is over that mark, then the only additional tax that you would incur is the Medicare tax which is supposed to come into play next year, but only for those over $250,000. The payment of the additional tax would probably go into your estimates or perhaps withholding depending on your situation.

[Lindsay Richards]

Would this be instead of the self employment tax or in addition to it?

[wnytaxman]

Originally Posted by Dick Noble

It is my understanding that exes can collect on either your SS or their own (which ever is the greater) only if they have not remarried. Has this changed?

Dick, according to the SS website a remarriage will not have any effect if they get remarried after age 60 or age 50 if they are disabled.

[wnytaxman]

Originally Posted by Lindsay Richards

Would this be instead of the self employment tax or in addition to it?

Lindsay, the self employment tax doesn't have any effect on S corp earnings. This is one of the big pluses for an S corp. Assuming someone didn't get caught, they could pay themselves a nominal wage and then take the rest of the earnings through the S corp and pay no FICA on the S corp earnings. The self employment tax applies to sole proprietorships, or Schedule C or Schedule F earnings.

[wnytaxman]

Originally Posted by Francesca

How so, Taxman?

Do you mean that exes can collect while the primary's still alive?

Thanks again

Oh yes, the exes can still collect based on the former spouses earnings if they haven't remarried before age 60. An ex will collect the greater of their own SS or their former spouses. This does not reduce the amount the primary earner will receive.

[PatStab]

If SS is allowed to go under the elderly and widowed with underage children will suffer in abject poverty like it was before SS was implemented.

I can remember when growing up the local "poor farm", yes, we still had one up until the 60's or so. I suppose there were people still alive in it. That was the saddest looking place I ever saw. I didn't see the inside but the outside was bad enough.

Also without this supplement and medicare what will each of us do or our parents if still alive? Better get ready to take care of our seniors in our homes again and also take care of other relatives. Forget about leisure and traveling you will be lucky to have enough to live on.

By the way medicare is already means tested. I took it for about a year but when my husband when out on another project I dropped it. You can without penalty if you have what is called evidence of credible coverage during the time you don't take it. I am not supposed to be penalized because I have continuous coverage. The reason I dropped it is my husband had better and less expensive group coverage. Once he finally retires we will both go on it. Now if he is between projects we will have to do something about ins since over 65 you can no longer take cobra.

I hear most everyone complain about how they could invest their SS deductions and have all this money. Since for many years it was such a small deduction and even now about 7 1/2% there is nothing stopping anyone from saving this small amount and becoming that multimillionaire everyone thinks they can. Amazing I haven't heard of any doing so out of our what 300 million population? From research I've heard about SS is one of the best buys you will ever get. A guaranteed lifetime income without worry of it not coming, being hurt by ups and downs of the stock market, or losing it. Sometimes we are to busy looking for fault and wanting to destroy what we have. And most studies say that even in 20 years or so they will still be able to pay 75% of the benefits. Also most people will find a way to spend it if they did receive it and then complain about that.

What we do need is a serious congress that wants to look at tweeking SS and making sure it continues to be a viable resource for the people that need it. But when it is brought up to reform anymore all that happens is the politicos and some extremists just want to get rid of it, so that's when folks run scared and rightly so.

Do you know that emerging countries are looking at things like SS and medical care for their populations to make sure they too are getting help in their old age or for their needy and are starting to implement them and all we are talking about is getting rid of these safety nets. They know from experience without basic needs being met you have unstable countries. We need this benefit to keep our country healthy and to provide a minimum level of poverty and folks talking about getting rid of it don't seem to understand the implications.

I know we never planned on rentals in our old age, not exactly something I want to mess with. but about 10 to 15 years ago when I started seeing and hearing about the decline of interest earnings my husband and I agreed we had to do something to supplement our retirement savings or it wouldn't last long so that is how we got into that. I would much rather do like my and his folks and have CD's that earn us interest and not be messing with these properties. Also my husband chose to work longer. We have no pensions, except a very small one that may pay some monthly utilities and the rest will be SS and rental income. Eventually we will sell one a year to supplement our income and try to retain the principal for our daughter.

But don't be so anxious to see the demise of SS and medicare, the poverty and hardship it will cause will take us back to pre depression times. It will not be a pretty picture for the majority of Americans and I fear that is a goal of many of the powers that be.

[wnytaxman]

Pat, I don't think any of us want to see the Social Security system ended. It has become something that millions of Americans have depended on. What I think most of us want to see is improvements to the system that will ensure that it will be there for not just our generation but for generations to come. That means that the system and its funding will have to be modified for it to survive and thrive. Even modifications to benefits will have to be made gradually so that everyone coming into their retirement years will know what to expect. If the retirement age is going to go up from age 67 for those born after 1960, then it needs to be set up now so that people born after that date will know what they need to try to plan for. No change to the system can be a knee jerk change without disasterous results.

[Hamshog]

Originally Posted by Rubix cube

To get to the 'net' amount you have to take out Cost of Goods sold for manufactures. Without doing so, the Boeing Company would be out of business. One of their three core competencies is large-scale systems integration. They don't mill every part themselves, they bring them together. I think the two of you agree on this. It's implied in wnytaxman's first paragraph. But it does increase the complexity of the taxes.

Most things which have caused the complexity for our tax system have (or had) some sort of design behind them to stimulate the economy. For instance, tax breaks for interest on homes make it more affordable for people to buy houses. More houses get built, more people have jobs building houses, their salaries are spent at grocery stores, that creates jobs, and so on.

The effect is that, hopefully, more money is generated in additional taxes than were lost by the deductions.

I certainly don't like the complexity of our taxes. I do my own, and until recently that included a small business. But, I too like you wish there were a simpler way.

Foghorn,

To get the "net amount" you have to deduct the "cost of doing business". Not just "Cost of Goods". That includes all overhead & materials. I know there would have to be laws/requirements for figuring that out. That's why I said the IRS would only be reduced by up to 75% instead of 95%.

But to have a book or books that have thousands of pages of law is crazy!!!! Loopholes upon loopholes for corps & the rich who can afford law/tax attorneys to squeeze every deduction from the code. I never bought houses because I would get a deduction?? I bought because I thought I'd net appreciation during my ownership and make a profit when I sold it.. Although I knew I could spend my money better than the government anyday.....

Regards, Hamshog

[Francesca]

Originally Posted by wnytaxman

Oh yes, the exes can still collect based on the former spouses earnings if they haven't remarried before age 60. An ex will collect the greater of their own SS or their former spouses. This does not reduce the amount the primary earner will receive.

Holy moly- That's a lot bigger than I thought it was. I wonder what if any effect that has on remarriage rates? (Just thinking out loud- not trying to throw the thread off-topic!) There might be a LOT of that kind of double (triple?) paying going on.

And it looks like I'm part of that problem, or will be.

I'm an "unentitled American" at the moment, but in a few years, simply by "virtue" of my age, I'll be joining the ranks of the I've-got-it-coming.

So! To get back to your question:

"When the time comes, what if any portion of my entitlement would I be willing to give up for the common good?"

That's the question, right?

[Lindsay Richards]

Every one of those loopholes was passed with a help of politicians who was in all likelihood were sponsored by some lobby or another. They all passed by congress. This is why, in my opinion, it all needs to be scrapped and started over. You can imagine the huge amount of money that would be spent to prevent this from happening. Withstandding the pressuree woould take tremendous courage by the politicians. I don't see a lot of that trait in Washington.

[PatStab]

This is not necessarily SS but we talk about foodstamps and aid for people and most everyone says well the lazy need to get off their duffs.

But do you know that one of the reasons this aid has increased is because peoples wages are falling. Wages in this country are not keeping up at all. When this happens there are a lot of full time working people, I knew some. Where the husband and wife both worked full time and yet still qualified for foodstamps. He worked on weekends doing some work for me to supplement his income when he could. The only way to solve this is lower the eligibility requirements in esscence say these people can live below what we define as poverty level. This will likely happen because the wealthy running these plants can now do it that collective bargaining has pretty much been squelched. The former working middle class who actually had a good level of income, benefits, and insurance are being systematically deprived of these. I don't like the new face of this country I'm seeing, but apparently many do. Or I should say they do until they are forced to join it. Always easier to say them instead of me.

I agree we need work done on all levels, not just SS and medicare but living wage and healthcare issues too.

But this is what happens when a country matures, they all go through certain stages to arrive at mature and once they do then a new approach will have to take place. Likely not going to be a pretty picture watching it play out especially if its not done correctly.

When you push to many people below poverty the results are the countries you see that have overthrown their leaders and now are in chaos. I hope we are smarter then that and handle it well but don't have a lot of confidence in our approach.