Episode Transcript
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Speaker 1 (00:00):
I'm seeing here in
the notes that this affects
about 1 million teachersnationwide and then another
million of people including,like first responders and other
public sector employees.
So this is actually really bignews and I haven't even heard
about it, which is crazy.
Speaker 2 (00:15):
I know I wish that we
had more people listening, just
so that we could make sure thisgets out to everybody.
Hopefully there's other sourcesof information for this, but
with the number of people thatlisten, I'm sure almost
everybody either has a spouse ora parent, or they themselves
fit into one of these categories.
Welcome to what your CPA Wantsyou To Know.
Speaker 1 (00:40):
Tax and accounting
help can be expensive, so we've
created this podcast to helpguide you through it all and
make you feel like you have aCPA in your back pocket.
Speaker 2 (00:51):
I'm Carson Sands.
Speaker 1 (00:52):
And I'm Taryn Sands.
Speaker 2 (00:54):
I'm a CPA with over
10 years of experience helping
people start and grow theirbusinesses.
Speaker 1 (01:00):
And I'm an MBA with a
specialization in marketing and
entrepreneurship.
Taxes suck and we want to makesure you don't pay more than
your fair share.
Speaker 2 (01:09):
We're here to share
everything your CPA wants you to
know.
Speaker 1 (01:13):
In a fun and easy to
understand way.
Speaker 2 (01:16):
Let's get started.
Speaker 1 (01:25):
Let's do it If you
haven't heard yet.
There's been some recent socialsecurity benefit updates this
year, and that's what thisepisode is all about today.
If you or your spouse or afriend or anyone in your family
have ever worked in the publicservice like police, teacher,
firefighter, anything like thatthis episode is for you.
So I don't know a lot aboutthis new change, so Carson is
(01:46):
going to explain this to all ofyou, and to me too.
So we're all going to belearning today.
Speaker 2 (01:52):
Even I'll be learning
some about this.
There are a lot of moving partshere, and the most important
thing is to get it oneverybody's radar, because
there's money that you could begetting that you're not getting,
and so we want to make surethat happens.
Speaker 1 (02:04):
Okay, explain to us
what is the change, and then
we'll go into a little bit ofthe finer details, because
there's always a lot of details.
Speaker 2 (02:13):
Okay, so the old
rules for social security
benefits had a provision inthere called the windfall
elimination provision, and itjust meant that if you worked in
some sort of public sector joblike teachers are especially
affected or firefighters, policeofficers, other public sector
workers some of these jobs don'tpay into social security, and
(02:33):
so if you were receiving, youknow, state or federal
government pensions, then youcould have a situation where you
paid in social security justlike everyone else, maybe
through a second job or maybefor spousal benefits or
something like that but you'renot eligible because you have
that public sector pensioncoming your way and that they
consider a windfall, and so youeither have your Social Security
(02:56):
benefits reduced or maybeeliminated entirely, depending
on the situation.
Speaker 1 (03:01):
So in the past, even
though they had paid in in some
way, they could not get thosebenefits once they retired.
Speaker 2 (03:08):
Yeah, that's the
really sick part.
So think about this.
Let's say we don't pay teachersenough, so they want to go work
in the summer to make extramoney.
Well, those jobs pay intoSocial Security, but the
teachers either don't get any atall or the amount they get is
greatly reduced compared toother people working similar
jobs, just because they happento be a teacher, with a
teacher's pension Now, or evenworse, you know, you think about
(03:31):
firefighters.
They risk their lives every day.
But how many clients do we havethat are firefighters?
Because they have sidebusinesses and they have to have
those just to make ends meet,because we don't pay them enough
.
And now we want to punish themand say well, you're paying,
we're stealing your socialsecurity taxes out of your
paycheck and we're not going tolet you have it back because you
have this other retirement plan.
Speaker 1 (03:51):
Sorry, yeah, I didn't
know that was happening, but
that's completely unfair and Ithink almost anyone would agree
with that.
Speaker 2 (03:57):
And also even if you
are a teacher and you've been
paying into this system that is,through your state or through
your local school district,whatever it is and you don't
qualify for your spousalbenefits either.
So most spouses, if you don'twork at all, you get to file and
get about half of what yourhusband or your wife gets if you
(04:17):
were a stay-at-home parent orwhatever the case and you just
didn't work.
And so people that didn't workat all get to make these claims,
and people that have beenworking their whole life
teaching your children orprotecting us, they don't get to
claim on their spouses either.
So it just doesn't seem fair.
Speaker 1 (04:35):
That's awful.
I didn't even know that, butthat's awful.
So hopefully you're here totell us that this has changed
and now they're going to begetting some of these benefits.
Speaker 2 (04:43):
It has changed.
So on January 5th 2025, theSocial Security Fairness Act was
signed into law.
Now, payments didn't startright away and it hasn't become
maybe as newsworthy as it couldhave been, because it was being
contested a little bit.
So payments didn't go out untilMarch or April.
This is when some of thepayments started going out for
people that either knew to fileor people that were already
(05:04):
receiving social security.
For some of them, it was justautomatically increased based on
the new law.
Speaker 1 (05:10):
Okay, so it's slowly
been rolling out, but just like
anything, it's a very slowprocess because someone didn't
like it obviously.
Speaker 2 (05:17):
Exactly.
Yeah, they were fighting andarguing about it, but they've
decided that they're going tomove forward with it and people
are already starting to see someof those benefits.
So for people that are alreadyreceiving some Social Security
and it's just being reduced bythe windfall elimination
provision, you don't really needto do anything except prepare
for your taxes to be a littlebit higher, because your income
will be higher, your monthlycheck from social security will
(05:40):
increase and you know so.
Your taxes will naturallyincrease right along with that.
Speaker 1 (05:45):
Right, so there's
nothing that they need to do
right now.
It's going to automaticallyincrease.
Speaker 2 (05:49):
That's true, yes, but
if you have been in a situation
where you weren't able to applyat all maybe you were a teacher
and your spouse had worked andyou weren't able to file as a
spouse and get some of thosebenefits.
Or maybe you had worked for 10years after you retired from
teaching, or in the summerswhile you were teaching, or
whatever, and you're in one ofthe states where you're
completely banned from gettingSocial Security at all.
(06:11):
Well, you're not in theirsystem and you need to go and
file for Social Securitybenefits, all right.
Well, how do you do that?
So you just need to go tossagov.
That's the Social Securitywebsite and that's where you can
get this started.
Now, if this is a spousal orsurvivor claim survivor meaning
widows and widowers, but aspousal or survivor claim then
(06:32):
you might have to go do iteither by mail or in person at
the Social Security office.
I'm very sorry that you have togo there, but I mean, we're
seeing people that they'regetting $1,500 a month when they
were getting nothing before.
So for 18 grand a year, itmight be worth your time to go
down there and actually dealwith them, as unpleasant as it
may be.
Speaker 1 (06:52):
Absolutely worth it.
If you are due these benefitsand if you're going to do
anything online, as always, justmake sure that the website
you're using ends in gov,because I can imagine there's a
lot of spam ones right now withthis.
Speaker 2 (07:05):
Oh, I'm sure there's
a
socialsecurityadministrationcomand they'll trick you into.
You got to pay this fee to filethis and it's not even illegal,
because they're filingsomething for you and just
charging you some ridiculousamount something you could file
all by yourself, Absolutely.
So make sure it does say gov,that's true.
Now there's also a special rulethat for retroactive benefits
you can only go back six months.
(07:27):
Typically.
That's a typical rule.
This was for any otherretroactive payments in the past
that you were going to get forSocial Security.
Maybe you filed late or forwhatever reason.
A lot of times you forfeit thosebenefits, but in this case a
lot of people are getting aspecial exception to that.
There's additional forms thatyou have to file to make that
happen.
That form is called SSA-561, arequest for reconsideration, and
(07:51):
that's just your way of sayinglook, we didn't know about this
and it was still being contestedinto law, and even if we knew
about it the day it was signedinto law, the benefits are
retroactive to January of 2024.
So we were already past thatsix month period.
So, based on that, people arefiling that request for
reconsideration.
Again, that's SSA-561.
(08:11):
And in that way, a lot ofpeople are going to be able to
go back and get their benefitsall the way back to January 2024
.
So you'll probably see, in thefirst month when they finally
start paying you, they'll bepaying you for all the way back
there.
So you'll get maybe 18 monthsworth of payments in the first
check and then after that you'llstart getting you just your
regular monthly amount.
Speaker 1 (08:31):
Okay, so they can get
a lump sum for retroactive
payment if they file this form.
Speaker 2 (08:38):
Yes, and you need to
talk to your tax person about
how that affects you.
Sometimes there's ways to goback and apply those amounts to
previous years without filingamended returns.
Social Security has somespecial rules that allow you to
do that when you receive lumpsums from previous years.
The reason that's important is,if you put it all in one single
tax year, it could bump youinto a higher tax bracket, right
and so by, but amending yourreturn could cost you a lot of
(09:01):
money too.
So by using that special way ofdoing that and your tax
professional should know how todo that or, if not, then get a
new person, but and that willapply the at least the 2024
amounts back to 2024 taxbrackets and tax rates, but
still be all reported on your2025 tax return, and that could
reduce your taxes a great deal.
(09:22):
So just ask them about that.
Speaker 1 (09:24):
I'm seeing here in
the notes that this affects
about 1 million teachersnationwide and then another
million of people includingfirst responders and other
public sector employees.
So this is actually really bignews, and I haven't even heard
about it, which is crazy.
Speaker 2 (09:39):
I know I wish that we
had more people listening, just
so that we could make sure thisgets out to everybody.
Hopefully there's other sourcesof information for this, but
you know, with the number ofpeople that listen, I'm sure
almost everybody either has aspouse or a parent, or they
themselves fit into one of thesecategories.
Speaker 1 (09:56):
So, yeah, absolutely.
If you've never shared anepisode ever before, this is
definitely the episode to share,because I personally know a ton
of people that this will affectand I'm sure you do too.
You know somebody working inone of these jobs that they need
to make sure that they're notmissing out on these benefits or
the retroactive benefits, orknowing if they need to go in
(10:16):
and apply.
Speaker 2 (10:17):
Right From what we've
read, the average increase for
people that are alreadyreceiving payments at least this
is just to get rid of thereduction and increase the
monthly that's an average of$300 to $700 per month in
increase.
But for people that were notreceiving it at all because they
weren't able to claim thespousal or for whatever reason
then we're seeing $1,500 a monthor higher.
(10:38):
So this could be a really bigdeal.
Speaker 1 (10:40):
For the people that
are widowers or something like
that, that they can now get allof those benefits.
It's a really big deal.
But also, $300 to $700 is a bigdeal too, right, and since?
Speaker 2 (10:50):
this affects
specifically teachers in
California and Texas, I know forsure, and a few other, I think,
Illinois and Ohio and there'ssome others that are.
They're completely cut off fromthe social security system.
So these are the people thatyou can't claim your spousal
half at all and so you haven'tbeen receiving anything.
(11:10):
And these are the people thatcan go now and get filed and
start receiving benefits.
So just to recap, some of thesteps that you need to take if
you're already receivingbenefits and I don't mean that
your spouse is, but you,specifically in your name, are
receiving benefits, youshouldn't have to do anything.
Any adjustments to the law.
They should recalculate,eliminate the windfall provision
(11:32):
and you should just see youramount go up monthly.
But if you are not receivinganything in your name, then you
need to go online to ssagov andstart making sure that your
information is in their systemand you filed everything you
need to file.
And even if you were previouslydenied because of this reason,
you need to reapply.
And then, of course, if youwanna make sure that you can go
(11:55):
all the way back to January of2024, make sure to file that
SSA-561 request forreconsideration.
Also, be prepared to talk toyour CPA about how this could
affect your income taxes for theyear and for previous years if
you're doing that adjustment andgetting the 2024 amounts paid.
Speaker 1 (12:13):
So if this affects
you or someone you love, now is
the time to do it.
Please, please, please.
Share this episode with anyonethat could benefit from this new
change and until next time,thank you so much for listening
to.
Speaker 2 (12:25):
What your?
Speaker 1 (12:26):
CPA Wants you To Know
Podcast.
Speaker 2 (12:35):
This podcast is
intended to provide accounting
and tax information foreducational purposes only.
All tax situations are uniqueand should be handled with the
assistance of a tax professional.