Laila Collins CPA

My main continuing education provider (Tax Speaker) gave a good summary of the lies that are circulating around Facebook in regard to Social Security. I get asked questions about this all the time so I thought I'd pass it along.

1. The biggest lie of all: “Any variation of President Trump wants to cut/eliminate Social Security”. Remember I am printing the lies from both sides of the political spectrum, but this whopper seems to make everyone’s conversation. On many, many, many occasions he has stated clearly that this is not his desire or the case. For those arguing that’s what Elon Musk is trying to eliminate-no he is trying to reduce fraud in Social Security in his own version of exaggerated claims, and the correct attribution of his quote was that he wanted to eliminate waste in the system.

2. “ We need to stop Illegal immigrants from collecting Social Security” Just as big a whopper as Number 1, they do not, never have and cannot receive Social Security. If you think that is incorrect please explain how they can get it without a legal Social Security number? If an immigrant is lawfully in the United States, they may possibly receive SSI or Supplemental Security Income, or qualify by paying into the system like everyone else.

There is evidence that undocumented workers actually improve Social Security's bottom line. Some do obtain Social Security numbers under false pretenses, and payroll taxes are withheld from their wages even though they are not eligible to later collect benefits. Undocumented immigrants paid $25.7 billion into Social Security in 2022, according to a July 2024 report from the nonpartisan Institute on Taxation and Economic Policy.

3. “Congress needs to pay in like the rest of us”. Members of Congress have been required to pay into Social Security since 1984.

4. “Congress needs to stop stealing Social Security for other things”. The system when designed 90 years ago required Social Security to invest any surplus in the safest investments available in America-US Bonds. They do invest that money in special US Bonds. What do you think a bond is-it is where the bondholder (Social Security) lends the money to the 3rd party (US government), no different from a bank lending you money. The US government then spends the money borrowed from Social Security, just like any other borrower.

5. “Everyone knows it's going broke-I want mine now” Maybe this should be listed first, I have only heard the same comment for nearly 50 years. Social Security has enough surplus (extra savings), combined with money coming in to pay all scheduled benefits for another ten or so years. Once the savings amount runs out there is still all the money coming in from workers-enough to pay 80% of all benefits forever. One simple solution to even it back up now and the future is to do away with the wage limit that allows higher income workers to stop paying into the system, but if they keep paying, shouldn’t their benefit increase?

6. “I will never get my money back-I can’t live long enough”. Nearly 85% of retirees receive far more in benefits than they paid in. “But I won’t get the lost earnings” What about the benefits your spouse/widow/dependent children get on your account? What about the long-term disability coverage you receive. Social Security was designed to also provide protection for you and your spouse/widow and kids and these potential benefits far exceed what it would have cost to buy disability coverage for you and your spouse, and a lifetime annuity they get upon your retirement or death. It is estimated that a 27 year old married worker with 2 kids has about $2 million in value of life insurance and disability benefits but sadly, few Americans under 40 realize that because they believe the garbage on the internet.

7. “The Democrats/President Clinton or insert name made Social Security Taxable” President Ronald Reagan (a Republican) made Social Security taxable in 1984 when he signed the Social Security overhaul bill.

8. “LBJ-a Democrat stole Social Security money”. Not true, or let’s just call it what it is-one of the worst lies of all. Wow-call Burger King for this whopper. LBJ included Social Security in financials but he did not use any of the money. Let’s say your kid has $100 in a piggy bank. You list that $100 on your own financials, but never take their money-it’s the same thing-an accounting gimmick.

9. “The Social Security Tax Rate is 7.65%”. Uhhh, not in the United States-it is 6.2%! Medicare is 1.45% for workers, but that’s not Social Security.

This is just the beginning. Allowing this tax is clearing the way for a state income tax.

WA Supreme Court clears way for state to collect capital-gains tax The state can collect the 7% tax on the sale and exchange of assets like stocks and bonds, pending a ruling by the state Supreme Court on the tax's legality.

A bit of good news from the IRS. If you paid a late filing penalty in the last few years, the IRS will automatically be refunding it to you.

IRS Sending Extra Refunds to 1.6 Million Americans in 2022 Many Americans may receive an extra refund this fall from the Internal Revenue Service. Those who were assessed a late penalty on their ...