June, 2021

Social Security June Newsletter

Social Security Spotlight: The Taxation of Social Security
NARSSA | Social Security Newsletter | June 2021
June 2021 Newsletter
Top Stories

Does your state tax social security benefits? Here’s why that’s crucial to your retirement strategy

Source: USA Today

“Plan ahead. Learning how Social Security is taxed as the federal and state levels is one task. Planning ahead for those taxes is another, said Martha Shedden, the president and co-founder of the National Association of Registered Social Security Analysts….”


Social Security COLA Estimate for 2022 Raised to 5.3%

Source: ThinkAdvisor

“The consumer price index in May rose 5% from 12 months earlier, which is the largest yearly gain since August 2008, the Labor Department reported Thursday. From April, the CPI grew 0.6%, representing the second-largest advance in over a decade…”


Don’t believe these Social Security myths

Source: MarketWatch

“As long as there are Americans who work, there is simply no way that Social Security can run out of money. Social Security has a dedicated revenue stream that is not going away…”


How to Report a Death to Social Security

Source: U.S. News & World Report

“When a loved one passes away, there are usually various arrangements that need to be made. One of the tasks to oversee will involve reporting the death to the Social Security Administration. If this process is not carried out, it could lead to confusion and extra tasks later…”

NARSSA In The News
Read about the benefits of becoming a Social Security expert and offering Social Security advisory services.
Ask Martha
This month’s featured question: My wife is from Poland. She has a pension from ZUS. She is 68 and retired. She currently receives a small social security check. Will her spousal benefits be reduced by Social Security GPO?
Martha’s response: Yes, she will still qualify for full Social Security spousal benefits; her foreign pension will have no bearing on her eligibility for spousal benefits. Foreign pensions are not considered as government pensions for purposes of the GPO (Government Pension Offset) provision, as specified in the first bullet of Section B, Payments That Are Not Pensions For GPO, in this reference from the Social Security Program Operations Manual….
Social Security Spotlight: The Taxation of Social Security
Are Social Security benefits subject to taxation? Yes. Many people are unaware of this, but Social Security income may be subject to federal, and possibly even state, taxation.

How is Social Security taxed? Federal taxation does not apply to all Social Security beneficiaries as there is a special formula used to determine if your Social Security income will be taxed. If your “combined income” exceeds a specific threshold, a portion (up to 85%) of your Social Security income will be taxed. These thresholds vary depending if you are a single filer or joint filer.

What are the thresholds that determine if your Social Security will be taxed? Up to 50 percent of your Social Security benefits are subject to federal taxation if your income is $25,000 to $34,000 for an individual or $32,000 to $44,000 for a married couple filing jointly. Up to 85 percent of your benefits are subject to federal taxation if your income is more than $34,000 for a single filer or $44,000 for joint filers.

Which states tax Social Security income? Thirteen states currently have a Social Security income tax and these states are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, North Dakota, Vermont, Utah and West Virginia. Some of these states use the same calculation as the federal government to determine if single or joint filers owe taxes. Some states have their own rules and regulations. West Virginia may soon eliminate its state tax.

Learn more about the taxation of Social Security here.

Case Study of the Month

Most people don’t know that a non-covered pension (a pension paid by an employer that does not withhold Social Security taxes from your salary) will reduce your Social Security benefits. Even a lump sum payment from a non-covered pension reduces benefits. Knowing in advance what impact that pension will have is critical to planning retirement income. Not taking a non-covered pension into account can result in an overpayment of benefits. And what happens next can be devastating. A new client requested my help after receiving a note from the Social Security Administration (SSA). It turns out that the SSA was unaware of her non-covered pension and after years of being over-payed, she needs to pay it back. The overpayment for her is tens of thousands of dollars. She has the option to pay it back in full or have it withheld from her future monthly benefits. Even if she pays it back in full, her new monthly benefits (without the overpayment) will be much lower than she anticipated and expected for the full length of her retirement, the rest of her life. When it comes to Social Security, what you don’t know can blindside you.


If you’re 55 and over, speak to a Registered Social Security Analyst today. RSSAs help people avoid pitfalls, understand their options, and optimize their Social Security benefit during retirement.

Train To Become A Social Security Expert
5 Self-Study Courses Available

Are you a finance or state-licensed professional?

Offer Social Security advisory services to your clients. Become a Social Security expert while earning continuing education credits through our self-study program. Sign up now.

Consult With An RSSA & Maximize Your Benefits
Most people don’t make optimal filing decisions and therefore, lose out on money they are entitled to. An RSSA® can help you maximize your Social Security benefits and support you in making the best decisions for your particular situation. An RSSA® can work with you in-person, on the phone, or via video. Request a consultation today. Get help now.

Follow NARSSA on:
Contact us: 1-800-698-1350 | info@rssa.com
No longer want to receive our newsletter? Click here
 Click here to unsubscribe.
68 South Service Road, Suite 100 • Melville, NY 11747 • United States

Back to Newsletter Archive