The Rising Social Security Tax: Essential Tax-Planning Tools

How is Social Security Tax Calculated? What is the maximum tax amount for 2024?

• Self-employed individuals: 12.4% of the employer tax
• Employees: 6.2% of wages

There is a cap on Social Security tax, and the maximum tax amount for 2024 is $168,600. Any amount exceeding $168,600 does not require additional payment.

Qualifications for receiving Social Security benefits: How to accumulate 40 points?

How can we qualify for medical insurance and Social Security benefits? You need to accumulate 40 points. If you earn 4 points each year, within a span of ten years (which doesn’t have to be consecutive), you can accumulate enough points. If each point costs $1,730 this year, earning 4 points would require $6,920. So, if your annual income reaches $7,000 or more each year, you can earn 4 points. For some new immigrants who are concerned about not accumulating enough points, as long as they find a way to accumulate the remaining 40 points in the coming years, it will be fine.

Major changes to Social Security benefits in 2024!

Some people are asking if taxes are required when receiving Social Security benefits. For married couples, if the Modified Adjusted Gross Income (MAGI) is below $32,000, Social Security benefits are not considered income; however, if it exceeds $44,000, 85% of Social Security benefits are considered income. Overall, with the increase in benefit amounts, taxes also increase.

How to save on Social Security Tax?

Generally speaking, if your income is already high, and there’s nothing you can do to change it, then your Social Security benefits should be taxed accordingly. However, if your other income is not high and consists only of investment interest income, public bond income, and bank income just above $44,000, how can you take advantage of the tax-saving benefits of Social Security benefits? Consider converting some of your investments into annuities, as at least the money earned from annuities is tax-deferred. For example: Suppose the total income for Mr. and Mrs. Chang this year is $60,000. If they deposit the $30,000 interest income into an annuity, their total income will be reduced to $30,000. At this point, their $60,000 Social Security benefits become non-taxable for Mr. and Mrs. Chang.

In conclusion, I hope that after reading this article, everyone can gain some inspiration to lighten their tax burden when receiving Social Security retirement benefits in the future. If anyone has further needs regarding tax, insurance, and even financial planning, please contact us at TransGlobal, and let us help you solve the problem.

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This article is for informational purposes only and should not be construed as financial advice or legal advice. Please consult with a professional to develop a strategy that is right for you. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. TransGlobal Advisory, LLC (TGA) does not provide legal, tax, or accounting advice. You should consult your personal tax or legal advisor before making any financial decisions.