Are Major Changes Coming To Social Security
A Proposed Bill called the “Social Security 2100 Act” was released yesterday in the House and it calls for major changes to social security. Parts of the bill are very favorable for farmers and parts not so much. Here are the highlights:
- It changes the COLA to the Consumer Price Index for Elderly Consumers.
- It increases the point at which social security benefits become taxable. This has never been indexed for inflation and jumps to $50,000 for singles and $100,000 for married couples. This would eliminate taxation on a substantial majority of social security recipients.
- It increases “tier 1” benefits to 93% from 90%.
- It slowly increases the rate of taxation from the current 6.2% to 7.4% effective 2042.
- FICA tax will now apply to all earnings in excess of $400,000. You will continue to pay tax on the normal wage base and then if your earnings exceed $400,000, you will pay FICA on that excess.
- Additional “excess benefits” will accrue to those payments in excess of $400,000.
- Benefits will increase for lower-income taxpayers who work for up to 30 years.
Will this bill pass as it. Highly doubtful, however, there is certainly a good chance that some type of major change to the Social Security System will happen over the next few years. We will keep you posted.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
Could you possibly give me insight on exchange of real estate between related parties (brothers) within a limited partnership? One brother wants out of the partnership and the other brother wants his interest in ranch land that is held in the limited partnership. Is it best to distribute the property to each of them as undivided interests, and let them exchange the property outside of the partnership in order to comply with 1031 regulations. Then the partner that wants to re-enter, hold the property for 24 months before re-entry into the existing limited partnership….
or….
Is it more beneficial to terminate the existing limited partnership, and form a new LLC to prove business use to comply with 1031 regulations?
or…
is partnership division a preferred method?
Thank you.