Where the money is....

When Willie Sutton bank robber was asked why he robbed banks he said "Because that is where the money is". How things have changed.

The banker's Bank the Federal Reserve is now robbing savers with near zero interest rates. Why? Because that is where the money is. It is a hidden tax. No law was passed. Still you are having the your money stolen through near zero interest rates to restore bank's balance sheets. If you had $300,000 in an IRA (or 401k) earning 5% in 2007 ($18,000 a year with nearly no risk) you are lucky if you earn half that today. That is a $9,000 or more of hidden taxes.

I hope to expose these types of actions and others by the FED and government. Boomers need to be vigilant - because their savings is where the money is. I will also delve into other areas of finances of interest to Boomers.

Saturday, December 18, 2010

Retired, married and receiving Social Security - marriage penalty

You thought that the Bush tax cuts in 2003 did away with the marriage penalty.  Admit it you thought that.  Well it did for working couples, but it didn't for older people receiving Social Security who have substantial other income.  Why does the government discriminate against older people being married?  Are we supposed to spend our sunset years alone?

Here is how it works:

For a quick computation of your potential tax liability, add one-half of your Social Security benefits to all your other income.

In this calculation, you must also take into account any tax-exempt interest you earned, as well as exclusions from income such as savings bond interest, work-provided adoption benefits or foreign-earned income.

If this amount is greater than the base amount for your filing status, a part of your benefits will be taxable.

Base amounts for figuring possible tax liability on benefits are:

  • $25,000 for single, head of household, or qualifying widow or widower with a dependent child. 
  • $25,000 for married individuals filing separately and who did not live with their spouses at any time during the tax year. 
  • $32,000 for married couples filing jointly. 
  • Zero for married persons filing separately who lived together at any time during the tax year.
Notice the base amount for a married couple with substantial "other" income is $32,000 (not 2x$25,000) and $25,000 for a single person.  Should boomers retired on SS get a divorce and just live together?  It depends on income split and other factors.  The point is that a marriage penalty exists for older citizens.  It is unfair and should be eliminated.  Contact your Senators and Representative....

For those of you not retired and receiving Social Security benefits this may alter when you decide to activate those benefits. 

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