Latest news with #seniorbenefits
Forbes
27-07-2025
- Business
- Forbes
A Tale Of Two Retirees: New Senior Tax Deduction And Foreigners' Social Security
The One Big Beautiful Bill Act introduces a significant deduction for aging Americans. For older ... More U.S. persons living stateside or living abroad, this means the potential of zero federal income tax. For nonresident aliens who paid into the same Social Security system while they were living in America, there is a 30% withholding tax and no access to any deductions, including the new senior deduction. While a campaign promise by President Donald Trump to eliminate income taxes on Social Security benefit income was not fulfilled, seniors were granted certain relief. The landmark tax legislation, the One Big Beautiful Bill Act (H.R. 1), signed into law on July 4, 2025 introduced a temporary special deduction for taxpayers aged 65 or older. The Social Security Administration initially misstated the impact of the new senior deduction. It had incorrectly suggested that the new deduction would eliminate federal income tax on Social Security benefits for most recipients. This statement was later quietly corrected to clarify that the deduction reduces taxable income but does not exempt Social Security from taxation. The new law permits certain older taxpayers to deduct up to $6,000 per individual, or $12,000 for married couples filing jointly. This senior bonus deduction is in addition to the standard deduction, applying for tax years 2025 through 2028, regardless of whether the taxpayer itemizes deductions. The deduction gradually phases out at a rate of 6% of the amount by which Modified Adjusted Gross Income exceeds $75,000 for single filers and $150,000 for joint filers reducing by $60 for every $1,000 above those thresholds. The deduction disappears entirely once MAGI reaches $175,000 for single filers and $250,000 for joint filers U.S. Seniors Abroad: Eligible for the Senior Deduction Many American retirees choose to spend their later years abroad and the trend is gaining momentum. Last year over 700,000 U.S. citizens were receiving Social Security benefits while residing overseas. Americans receiving such benefits overseas are often still required to file U.S. tax returns if their income exceeds filing thresholds. These overseas retirees are eligible for the new senior deduction. Up to a maximum of 85% of U.S. Social Security benefits may be taxed, regardless if the recipient is a U.S. citizen/resident or foreign national who is nonresident. A special taxation formula applies to Social Security benefits for U.S. citizens and residents to determine what portion of the benefits may be taxed. The tax rate applied to this taxable portion is the individual's marginal U.S. tax rate commencing at 10% to a maximum 37%. The taxation formula depends on the U.S. taxpayer's combined income: Under the OBBBA, seniors will be eligible to claim the senior deduction commencing tax year 2026, provided they meet the age, MAGI, and filing criteria. It is important to note that the OBBBA doesn't eliminate taxes on Social Security benefits. It provides an entirely new deduction of $6,000 ($12,000 for joint filers) for taxpayers aged 65 or older by December 31 of the tax year, whether they're receiving Social Security benefits or not. This additional deduction may result in no tax liability for many seniors. Foreign Nationals Abroad: A Disparate Tax Treatment On Social Security Benefits In today's world, retirements are becoming far more global. Foreign individuals working in America may have paid into the U.S. Social Security system for decades. They may later return to their home countries and no longer have U.S. tax status, becoming nonresident aliens for U.S. income tax purposes. NRAs are subject to a withholding tax regime on items of U.S.-source income, including U.S. Social Security benefits, with the general withholding tax rate of 30% (unless the rate is reduced by a relevant tax treaty). In sharp contrast to the U.S. individual, NRAs collecting U.S. Social Security while living abroad face a much harsher tax burden under the withholding tax regime. This often comes as an unwelcome surprise for those seniors who have not anticipated the tax effects on their Social Security payments. The U.S. imposes a flat 30% withholding tax on 85% of the Social Security benefits paid to NRAs, resulting in an effective tax rate of 25.5%. Unlike U.S. citizens and residents, NRAs cannot offset this withholding by claiming deductions or lower marginal tax rates. While some tax treaties eliminate U.S. tax or reduce the withholding rate on such benefits, many countries have no such agreements with America. Social Security And The Gap in Tax Fairness Both U.S. seniors abroad and foreign nationals abroad who are NRAs often depend nearly entirely on Social Security income. Both groups contributed equally to the Social Security system. Yet only U.S. citizens or residents can reduce or eliminate their tax burden via tax deductions including the new OBBBA age-based deduction. NRAs receive no such relief. The current law draws a stark divide: one group benefits; the other does not. Taxation of Social Security: Reform Ideas for Greater Equity To bring parity, there are various possible measures that Congress could consider. One possibility might be to permit low-income NRAs to opt into U.S. tax reporting and progressive tax brackets instead of mandatory flat withholding. Another could be extending a senior or low-income deduction for foreign Social Security recipients living abroad that is similar to the senior deduction granted by the OBBBA. Final Word The One Big Beautiful Bill Act introduces a temporary (3-years, unless extended by a future Congress) yet significant deduction for aging Americans. For older U.S. persons living stateside or living abroad, this means the potential of zero federal income tax. For foreign nationals abroad, however, who paid into the same Social Security system, the current status quo for NRAs means 30% withholding and no access to any deductions, including the new senior deduction. Both U.S. and foreign nationals have contributed to the U.S. Social Security system through decades of work and payroll taxation, yet only American citizens and residents benefit from the new senior deduction. The new OBBBA provision clearly provides meaningful relief to many American seniors through the special deduction. However, it leaves untouched the longstanding 30% withholding tax imposed on NRAs receiving U.S. Social Security benefits. Since the OBBBA did not address this issue, the significant disparity in how income earned through equal payroll tax contributions continues, with taxation being based solely on citizenship or residency status. Stay on top of tax matters around the globe. Reach me at vljeker@ Visit my US tax website and blog
Yahoo
15-07-2025
- Business
- Yahoo
5 Warning Signs Your GIS Payments Are at Risk
Written by Aditya Raghunath at The Motley Fool Canada The Guaranteed Income Supplement (GIS) provides financial support for low-income Canadian seniors. The maximum monthly GIS payment in the third quarter (Q3) of 2025 is $1,097.75 for single, divorced, or widowed seniors earning below $22,272 annually. Canadian couples who both receive Old Age Security (OAS) get up to $660.78 each month if the combined income is under $29,424. Notably, most recipients receive less than maximum amounts, as GIS is reduced by 50 cents for every dollar of other income received. It's crucial to note that certain situations can jeopardize your monthly GIS payout. Here are five critical warning signs to watch for: 1. Missing tax-filing deadlines: Failing to file your annual income tax return is the most common reason GIS payments are suspended. Even with minimal income, you must file taxes with the Canada Revenue Agency every year to maintain eligibility. 2. Exceeding income thresholds: GIS is income-tested, with strict annual limits. For 2025, single recipients face a $22,272 threshold, while couples have varying limits from $29,424 to $53,376. Additional government benefits like CERB (Canada Emergency Response Benefit) or employment insurance can temporarily push you over these limits. 3. Extended absence from Canada: Leaving Canada for more than six consecutive months automatically stops GIS payments, as the benefit requires Canadian residency with no international protection agreements. 4. Loss of Old Age Security: Since GIS eligibility depends on receiving OAS, any interruption to your OAS pension immediately affects your GIS payments. 5. Unreported marital status changes: Marriage, divorce, or spousal death impacts GIS calculations. Failing to notify Service Canada of these changes promptly can result in overpayments requiring repayment or sudden payment reductions. We can see that the monthly GIS payout may not be enough to cover your expenses. So, it's essential to supplement these payouts with other income streams. One low-cost strategy to create a passive-income stream is to invest in blue-chip dividend stocks such as Bank of Nova Scotia (TSX:BNS) that offers a yield of almost 6%. Bank of Nova Scotia reported fiscal Q2 adjusted earnings of $2.1 billion, or $1.52 per share, amid a challenging macroeconomic environment marked by trade tensions and tariff uncertainty. CEO Scott Thomson emphasized the bank's focus on controllable factors, including the strengthening of its balance sheet and disciplined capital allocation. Scotiabank announced a quarterly dividend of $1.10, up from $1.06 per share. BNS also launched a 20 million share buyback program, which showcases confidence in its capital generation capabilities. The Canadian big bank ended Q2 with a common equity tier-one ratio of 13.2%, up from 12.9% in Q1. The bank took a conservative approach to credit provisioning, building nearly $200 million in allowances this quarter for a cumulative $1.8 billion build since late 2022. This provision reflects management's cautious stance regarding potential tariff impacts on trade-sensitive sectors like automotive, agriculture, and manufacturing. Its Global Wealth Management delivered strong 17% earnings growth, while Global Banking and Markets generated fee income growth of 26% in underwriting and advisory services. Canadian Banking faced headwinds from deposit margin compression due to rate cuts, though the bank maintained strong mortgage renewal rates exceeding 90%. International Banking demonstrated the benefits of geographic diversification, with solid performance in Chile, Peru, and the Caribbean offsetting concerns in Mexico. The bank remains committed to its 5-7% earnings per share growth target for fiscal 2025, including the impact of recent provisions and KeyCorp contributions. Management maintains confidence in achieving a +14% return on equity over the medium term, supported by strategic investments in client primacy, operational efficiency improvements, and strong capital positioning to navigate ongoing uncertainty. A widening earnings base should support consistent dividend hikes, which will enhance the yield at cost. Analysts expect the TSX stock to raise its annual dividend from $4.32 per share in 2024 to $4.87 per share in 2029. The post 5 Warning Signs Your GIS Payments Are at Risk appeared first on The Motley Fool Canada. Before you buy stock in Bank of Nova Scotia, consider this: The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Bank of Nova Scotia wasn't one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years. Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the 'eBay of Latin America' at the time of our recommendation, you'd have $24,927.94!* Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 30 percentage points since 2013*. See the Top Stocks * Returns as of 6/23/25 More reading 10 Stocks Every Canadian Should Own in 2025 [PREMIUM PICKS] Market Volatility Toolkit A Commonsense Cash Back Credit Card We Love Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Bank Of Nova Scotia. The Motley Fool has a disclosure policy. 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
08-06-2025
- Health
- Yahoo
7 Free and Discounted Services You Didn't Know Were Available to Social Security Recipients
You've worked hard, you've earned your income, and now you're ready for life to be a bit easier. You're ready for the doors to open and the sun to shine as it should. Once you start collecting your Social Security check, you should be able to take it a little easier. Read More: Find Out: The good news is that many organizations agree with this. Several programs make food, transportation, and fun all free or cheap for Social Security recipients. Here are the top seven free or discounted programs that you may not have known were offered to Social Security recipients. There's something so wonderful about farmers' markets. You get to get outside, mingle with your community, and get fresh, delicious food. It's not all fruits and vegetables, either. You might find local honey, amazing baked goods, and even a great cup of coffee. The Senior Farmers' Market Nutrition Program wants America's seniors to get out, move around, and get healthy food. That's why low-income seniors get discount cards that will ensure they can buy from farmers' markets, roadside stands, and local farms at significant discounts. All you have to do is sign up and get out there. See Next: But what if you can't get out there? It happens. It may be that you're not moving around as well as you used to. It might even be a temporary situation, just until you get in better shape. Fear not. Meals on Wheels is a program that will make sure you get the good food and nutrition you need while you're more housebound than usual. The organization delivers food to victims of natural disasters and seniors who struggle to leave their homes. Many social security recipients can't get to the grocery store, or even afford enough groceries to feed themselves as much as they need. Or, you might not be in a position to cook and prepare healthy food. You need to keep your energy and health up to par. That's where Meals on Wheels comes in. The food is hearty, healthy, and delivered with a smile. Still, even if you don't have your vehicle, you can still get out. That's thanks to the transportation services available to seniors and Supplemental Security Income (SSI) recipients. The National Aging and Disability Transportation Center operates in all 50 states and ensures people without transportation, on social services, like Social Security Disability Insurance (SSDI) and SSI, can still get to where they need or want to go. While many seniors and individuals with disabilities can use public transportation and receive discounts, others are unable to do so. It might be a case of living in a rural area, or you might be in a neighborhood without a close bus line. In any event, your community should offer a supplemental service like Dial-a-Ride, volunteer transportation, or assisted transportation. Federal grants fund these programs, so they're free to social security recipients. If you want to get out, you should be able to. Speaking of getting out, fitness is essential at every age and for every ability. It's good for your body and your brain, and it can even help improve symptoms of many disabilities and aid in healthier aging. And you can start a new fitness plan at any age. Many seniors realize they need to lift more weights and do more cardio once they retire. Social Security recipients on Medicare Advantage are eligible for a program called Silver Sneakers. This plan gets you access to thousands of gyms, churches, and other fitness programs across the country. And you can find a class or program that works for you. You'll find everything from yoga and swimming to Zumba or just plain old gym equipment on the gym floor. It's a pain to pay your taxes every year. Not only might you have to come up with cash to pay what you owe, but you also have to put your documents in order and pay a preparer. It's too much. Well, the federal government agrees with you. Thanks to the VITA program, you may qualify for free tax help. It is particularly aimed at: People with disabilities People making less than $65,000 People aged 60 or older Not only will you get free tax preparation, but you'll be able to trust that these services are reliable as they're certified through the IRS. Thinking of going back to school? Why not? Many seniors start a whole new life after retirement, and it can often begin with a few community college courses. Every state in the United States has universities and community colleges that offer free or steeply discounted courses to senior citizens. You might explore a subject you've always been fascinated by, or you could go back to school to build on your existing education. One of the greatest advantages of being older is the wisdom you get from life experiences. Building on that wisdom with an academic education can only be a win. But academic education is not the only kind. The arts are, after all, what keep humans … well … human. And the National Endowment for the Arts (NEA) feels the same way. That's why the NEA offers free access to thousands of museums across the country for seniors and people with disabilities. And if you don't feel like exploring beauty inside, you can always take advantage of the National Parks' offer to explore one of the many natural beauties around the country. The National Park Service offers free passes to Social Security recipients, so you can spend your golden years chasing some of the country's most magnificent waterfalls for free. More From GOBankingRates How Much Money Is Needed To Be Considered Middle Class in Every State? This article originally appeared on 7 Free and Discounted Services You Didn't Know Were Available to Social Security Recipients
