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Thursday, October 28, 2021

Stimulus Checks Have A Grim Effect On The Taxes Of Social Security

There isn’t anyone in this world who does not approve of free money. And the government of the United States of America has distributed quite a lot of money in the form of stimulus checks to help its citizens meet their needs. However, nothing comes without a cost. There is a huge possibility that the money will affect individuals especially senior citizens. The income level of the senior citizens could go up due to the stimulus checks causing them to be liable for their social security benefits taxes. Either that or the rate of their security taxes could reach a new high.

Stimulus Check And Combined Income

There are so many citizens of the country who are not liable to pay their taxes on social security. However, there are still a number of people who are not that lucky. As per rules, in case the “combined income” of someone reaches 25,000 USD for the unmarried and 32,000 USD for the married ones, they are liable to pay for about 85% of their security benefits. So the bigger question, for now, is if the stimulus checks will have any role to play in increasing the level of income. 

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The answer to this is “no.” The reason for this is because the payments provided under the relief aid do not count as combined income. Not just that, it does not count as any form of income. Instead of that, the stimulus payments are advance payments of the tax credits.  Since they are advance payments of the recovery rebate credits, they do not have any impact on the social security taxes. If there is someone who did not receive either the first or the second round of the stimulus checks despite passing all the eligibility criteria, they can reclaim the money while filing for their 2020 tax returns. 

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