Originally published June 16 2005
Some people's Social Security can be taxed
by Mike Adams, the Health Ranger, NaturalNews Editor
This Fox News article describes how people collecting Social Security disability and worker's compensation could be taxed for income.
As Sandra Flores found out this month, if you are also collecting disability under Social Security, this can cause your workers' comp to be taxed.
She began collecting workers' compensation in November of that year.
Her employer's long-term disability insurance plan required that she apply for Social Security disability benefits once she had collected workers' comp for a year.
When she and her husband filed their 2001 income tax return they listed the above income, but said $11,855 was not taxable because it consisted of workers' compensation.
The law is very clear: when Social Security benefits are offset by workers' compensation benefits, the IRS has to treat the entire amount --- $20,675 --- as if it came from Social Security.
Unlike workers' compensation, Social Security benefits --- whether they're for disability or retirement --- may be taxable.
If it didn't exist, people who only qualify for disability payments --- with the entire benefit coming from Social Security --- would potentially pay more tax than someone whose income was partly from Social Security and partly from workers' comp.
If your provisional income exceeds the above amount, but is under $44,000 ($34,000 for single taxpayers), 50 percent of your Social Security benefits is added to your other income and is taxed at whatever tax bracket you fall into.
If you assume that the recipients of these payments were all in the 15 percent tax bracket (which is lowballing this because an unknown number of taxpayers were subject to higher tax rates), this means the amount of tax the government collected on Social Security benefits that year was ...
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