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Readers` Mail—Taxation of Social Security I'm retired but started working for something to do. As a result, I estimate that my year 2000 income will be $14,000 more than for 1999. Even with this added income my tax bracket would remain 15%—EXCEPT for the increase in taxable Social Security. As a result of this, my tax rate for this added income of $14,000 will be 28%. Is the repeal of taxation of Social Security to be effective for the year 2000? If not, why not? Taxation of Social Security never should have been permitted. Not only should taxation of Social Security be repealed but the Feds should be required to repay all taxes collected on Social Security. There is a projected budget surplus which has prompted a tax-cut scam—supposedly reducing taxes for everyone but in fact primarily cutting taxes for the rich. Instead of cutting taxes for the rich, why not use expected surpluses to repay all the taxes wrongfully collected from Social Security recipients—the poor!—J. N., AL If you are asking whether the repeal of the reduction of Social Security benefits would be effective for 2000, the answer is yes. Until recently, Social Security recipients age 65 through 69 lost $1 in benefits for every $3 they earn over a maximum that is recalculated every year. In 2000 that amount was $17,000. Benefits of recipients age 62 to 65 continue to be reduced by $1 for every $2 earned beyond the limit, which this year is $10,080. The new legislation is retroactive to January 1, 2000. If you are at the full retirement age of 65 or older and your benefits have been reduced in 2000, then you will be due a refund. According to the Social Security Administration, refunds will be issued in May. Your benefits will be adjusted in June. Unfortunately this bill would have no effect on eliminating the taxation of Social Security benefits if you earn over certain limits. Taxation of benefits is not the same thing as reduction of benefits. The taxation rules would remain unchanged. If your income is more than $25,000 single, $32,000 joint up to 85% of your Social Security benefits would be subject to tax.
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