Can Social Security be Fixed?
Last Thursday and Friday, I attended a tax conference in Traverse City. This spring conference is always held in a great location and is well attended. It’s always good to
see fellow tax professionals after a long tax season and interesting to see how they fared through another arduous tax season.
Our federal Congress and Michigan legislature, in their infinite wisdom, ensure that there is always a never-ending supply of subjects to be covered. Of course, some years they pass more laws than others, and this year they seem to be off to a particularly good start, especially the federal Congress. I think they want all of us tax professionals to stay in business forever. At these conferences, since it is two days long, we are afforded the luxury of covering a few new subjects and also a myriad of “old” subjects. The more proficient we can be in these old subjects, the better level of service we can give to our clients. One of the old subjects we covered was the topic of Social Security. Tax professionals like me answer questions all year long on various aspects of Social Security. As we ourselves are getting older, our clientele is also getting older. According to the National Association of Tax Professionals (NATP), the average tax professional in the United States is 56 years old. In Michigan, the 800+ NATP members average 57 years old. What this means is we tax professionals have just as much of a vested interest in the Social Security system as our clients do. We are all in the same boat. If the Social Security system goes belly-up, that’s a problem of epic proportions. Since a significant portion of many taxpayers’ retirement income will come from Social Security, it’s in our national best interest to keep the system solvent and afloat.
There are a number of reasons the system is going bankrupt. There are a number of fixes that the government can make that will prolong the time at which Social Security might go bankrupt. Over the next few weeks, I will look at these reasons and these fixes.
At the same time, in order to help our clients, we have to be able to answer a wide variety of Social Security questions. Among the questions we have to be able to answer and issues we have to explain are: just exactly how does the Social Security Administration calculate my benefit; how many years do I need to work to draw a regular benefit; how much am I penalized for those years I am laid off, looking for work, or raising children; how many years do I need to work to draw a disability benefit; how and when do we apply for benefits; is it advantageous to begin drawing benefits at an early age; what is the break-even point of drawing early or delaying to draw; what benefits are available to the surviving spouse of a spouse who dies with under-age children; what are the benefits available to a taxpayer who becomes disabled; can a taxpayer work while drawing benefits; can I be forced to pay back my benefit if I work and earn too much money; what is the advantage of delaying to draw benefits until age 70; can a taxpayer change his mind once he is drawing and quit drawing; when do I become covered under Medicare; can I be covered under Medicare even though I am not drawing a Social Security benefit; how do I fix a mistake on my Social Security benefit statement; and how much of a Social Security benefit can be taxable.
The questions are of a continuous and unending nature. Every question that comes up deserves a complete answer. Unfortunately, the complete answer today might not be the proper answer tomorrow. And therein lays the rub in the world of taxation. The rules change from time to time just so tax professionals will keep attending seminars in places like Traverse City and writers like me can keep writing articles for newspapers like The Squire. Next week, we will get started on those Social Security rules.
Jerry Coon is an Enrolled Agent.
He owns Action Tax Service on Northland Dr. in
Rockford.Contact him at www.actiontaxservice.com.