Social Security recipients are excited for a boost in their benefits, but a lot will still be subject to deduction.
The average payment right now for 2022 is about $1,657 per month. With a COLA boost in the near future, recipients can soon expect larger monthly payments.
Unfortunately, much of that boost will go toward the many deductions Social Security recipients face each month.
Here are the most common Social Security benefit deductions
According to AARP, there are at least eight deductions recipients will face.
Medicare
For those enrolled in Medicare, the premiums for Medicare Part B will be taken out of the benefit in full. The standard payment that most Americans pay each month is $170.10. This amount will drop to $164.90 in 2023.
Word deductions
Those who chose to get their benefits before their full retirement age are subject to the earnings test. This means once a working retiree hits a certain income, $1 is withheld for every $2 they make past the threshold.
Federal income taxes
For retirees that have an income over $25,000 as a single filer or $32,000 as a couple will see 50%-85% of their benefits taxed.
Pensions for the government
2 million Americans receiving Social Security benefits are covered by the Windfall Elimination Provision.
This rule can reduce benefits for people that collect a pension from a job where they did not pay taxes in Social Security.
It also reduces benefits for those that qualify for Social Security based on other work that they paid into the system.
The protection is for individuals that mainly wored for the state or local government. Many teachers or law enforcement officers fall in these categories.
Debts owed
People can see their wages garnished if they owe debt on things like their car or credit cards. Other debts that could result in your payments being held include back taxes, non-tax debt to federal agencies, and court ordered payments like alimony, child support and restitution.
Overpayments for benefits
If you end up getting more in Social Security benefits than you were entitled to, you will end up paying it back. This happens more with SSI than Social Security retirement benefits.
Surpassing the family maximum
Some families are larger, and when your spouse and children all qualify, the number of people may exceed the maximum benefit. This means your benefits will be cut back to meet the maximum limit despite there being even more people.
Worker’s compensation
For people that receive SSDI as well as worker’s compensation, they may experience an offset to lower their disability benefit.
Taxes & the IRS: Avoid mistakes when filing documents for tax return
Samantha edits our personal finance and consumer news section. Have a question or lead? Send it to [email protected].