No Tax on Social Security? Not Exactly.

Episode Transcript

Speaker 1 (00:00):
Great pleasure. Now, welcome back to the program, Bob Burger.
Bob is the official CPA of kfab's Morning News. You
don't mind that title, Robert, do you not at all?

Speaker 2 (00:11):
Gary? Good morning, Jerry, Jim and Jake. How you guys
getting along this morning?

Speaker 1 (00:14):
Great? Good to have you on. I first asked Bob
to come on some weeks ago, but we couldn't put
it together until now because I got an email from
one of our regular listeners, Michael, who said he's having
a problem. He's helping his mother with some tax stuff,
and he said, this is the first time I've helped
her file for the Nebraska homestead exemption. She's in her eighties,

(00:37):
lives on a fixed income, and Mike says, we were
shocked to see that the form counts her Social Security
income twice, once as part of her taxable income, justin
gross income, and then again in full and it ends
up making her look like she's made a lot more
money than she actually took home. And Michael's looking for

(00:58):
a little help here, Robert, what can you tell him?

Speaker 2 (01:00):
Well, Gary, number one, I really appreciate your listeners sending
your emails that we can address that on the radio.
That that's really helpful. There is the form that you
complete for this Nebraska homestead exemption, And first of all,
I'm not sure a lot of people realize that there
is the ability to basically totally exclude property taxes once
you're over sixty five and there's some other classifications and

(01:22):
not have to pay any property taxes on your residence.
So there is a possibility to do that. And it's
a Nebraska Form four fifty eight, and you can go
online and download that form and instructions, and there's a
there's a couple, there's a The general form is four
to fifty eight, and there's a Schedule four fifty eight
I is what you use to compute your taxbile income.

(01:44):
And basically, you know people that are underneath probably about
thirty six thousand or forty six thousand, depending on your
marriage status, will qualify for a complete exemption so you
don't have to pay property taxes. The computation is on
Schedule one that your listener was referring to, and it
does have an add back there for Social Security, but

(02:07):
it's only an ad back for the amount that was
excluded on your federal return. So your federal return you
can they'll tax up to eighty five percent of your
social Security So the amount on the federal return is
only eighty five percent on the form, they're asking you
add back the other fifteen percent. So they just want
to show to have you show one hundred percent of
your social Security income as being the income that they're

(02:31):
looking for on that household income table.

Speaker 1 (02:33):
Okay, that's for the homestead exemption.

Speaker 2 (02:35):
That's for homestead exactly.

Speaker 3 (02:37):
You might also clarify, Bob about this social Security tax
on social Security that Trump was parent was really big
about what's the real fact behind that?

Speaker 2 (02:47):
Well, I mean, and a lot of that is addressed
in this new OBBA Act. And you know how touchy
social security is as a political football. Just whenever you
mentioned you know, we're going to cut, we're going to change,
there's always a lot of uproars. So I think they
sort of did an end run on this and allowed

(03:08):
you this what they call a it's a temporary senior
deduction for tax on Social Security. So rather than basically
say hey, we're no longer going to tax social Security,
they just said, all right, seniors who have income at
a certain level or below a certain level, we're going
to give you a six thousand dollars credit or deduction

(03:30):
for your taxable income, and that will substantially or basically
work the same way as not taxing a portion of
your social security.

Speaker 1 (03:40):
Right, but it should not have been sold as it was.
Let's be honest. Should have been no tax on social security.

Speaker 2 (03:45):
Oh that sounds good, correct, I mean, but you know,
as you know that football is so hot the same
time you mentioned social security cuts or changes, everybody gets
up in arms. And I think this is sort of
a nice end run and at least gives you some
benefit for that as well. But right, it shouldn't be.

Speaker 1 (03:59):
Sold as right, and that phases out right with the
higher incomes. It's the six.

Speaker 2 (04:04):
Thousand for a single people over seventy five thousand phases
out marrit filing joint one hundred and fifty thousand. Then
you lose that benefit. Okay, that's really for the low
income text.

Speaker 1 (04:14):
Fairer is the no tax on tips? Legit? That was
that claim? True?

Speaker 2 (04:20):
It is? I mean, and that's that's really sort of interesting.
And there there are some phases from that. There are
some income limits on that as well, but they're they're
going to reduce your taxable income based on your tips,
and it's going to be interesting. Sort of the technical
side of that is, how do they how are we
going to do that? So I think on your W

(04:40):
two's you're going to see a box for not only tips,
you know, your regular wages, but you're going to see
a box for tips, and now a box for overtime
wages because overtime will qualify under that too. So technically
it's going to be much more complex when you get
your W two And the poor payroll processors have just
got to be scrambling right now because now they have
to basically update their software so you can account for
were those tipped items and report them in those the

(05:03):
overtime wages and report them I see, can properly record
the tax benefits.

Speaker 3 (05:07):
Yeah, they haven't been recording the tips in the tip
jar since the first tip jars put out there.

Speaker 1 (05:11):
But you know, here's the thing.

Speaker 3 (05:13):
A lot of waiters at high end restaurants will make
over two hundred thousand dollars a year.

Speaker 1 (05:18):
Uh.

Speaker 3 (05:19):
There is a waiter I knew a waiter in Kansas City,
mccarmick and Schmicks that was doing one hundred and eighty
thousand dollars a year twenty five years ago, and most
of it was tips. So I mean a lot of
waiters and waitresses are really going to benefit from this,
and it could cause a big uptick in the industry.

Speaker 1 (05:36):
I want. I wonder, well, that's that's that's another topic
I don't want to get. I don't want to get
buried in that. But the no tax on overtime you
touched on, that's right there right In other words, you
make overtime, you can keep it all.

Speaker 2 (05:50):
Yeah again you get you can keep it. And there's
phase outs for limits, and there's there's the amount of
the deduction is also capped. I mean for singles it's
twelve thousand, five hundred. From Mary found joint is twenty
five thousand. So there's you know, you can only do
so much of the overtime. But I think there's a
lot of there's a lot of salaried individuals right now
that I think their employers ought to be looking at saying, hey,

(06:12):
should we be changing our method of payment to you know,
to too hourly and pay them the overtime and give
them the opportunity to save those save those tax dollars.

Speaker 3 (06:21):
Sure are going to be good for cops and fire fighters.
A lot of you know, these emergency first responders work
a lot of overtime out nurses.

Speaker 2 (06:29):
Yeah, right, right, yeah, Greig, So that'll be really interesting
to see how they do that.

Speaker 1 (06:33):
Okay, Robert, just with a minute left. Anything else huge
that that people should be aware of as it pertains
to their taxes with the big beautiful bill.

Speaker 2 (06:41):
Well, I mean right now, the sort of the immediate
thing that you want to do, all of the energy
credits disappear at the end of this year. So if
you're looking to replace windows in your home, and you're
look looking to replace furnace or hvacs, you want to
do that this year. I mean, there's the credits, not huge,
it's like six hundred dollars for the windows and another
six hundred dollars for HVAC based on the amount, you know,

(07:03):
amount that you spend, but it is six hundred dollars.
So if you're going to do that anyway, I'd certainly
make an effort to do that right now. I think
that's that's pretty much the biggest thing that we see
going forward is is the phase outse of all those
energy credits disappear at the end of this year, and
it's probably rightfully so. I mean, you know, we've had
those for several years and I think we've we've claimed
all the credits we can, so I think that's that's

(07:25):
a pretty good way to do it. But that's something
you can do right away.

Speaker 1 (07:28):
And propping up the green energy industry, right.

Speaker 2 (07:32):
And you guys have done a great job getting you know,
because you had Don Bacon on yesterday and Emery Songer
had deb Fisher on last night and they sort of
explained the reasons behind a lot of this bill. So
it's you know, you guys, it's it's really a big advantage.
And if there's ever been a year to hire a
tax professional, this is the year because this bill is
so confusing and we haven't even got into this new

(07:54):
Trump account, which is going to be unbelievably complex. It's
sort of like a glorified I uh broughth Ira for
for young people.

Speaker 1 (08:02):
So go to be the greatest account of all times. Bob,
you you beautifully count. Yeah, this is uh, this is
a goof hop season for you, I assume, and you'll
be gearing up for tax season this winter. But you're
a champ. I appreciate you coming on.

Speaker 2 (08:16):
I love it, love doing it. And stay profitable. You guys,