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NC Tax Reform Does Not Affect Social Security Disability Benefits

Injured workers in NC who survive off of their Social Security Disability benefits narrowly missed a close call with tax reform.

Guide dog helping blind man in the city.Currently Social Security benefits are not taxed in North Carolina. However, earlier this year, a bill was tentatively approved by the Senate that would initiate a 5.4% tax on Social Security benefits in 2014 and 5.25% thereafter on beneficiaries’ monthly checks.

However, that segment was taken out in the tax reform bill that swept through the House and Senate in mid-July and was recently signed into law by Governor Pat McCrory on July 23rd.

Arguments against Social Security Tax in NC

Those in opposition of initiating a Social Security tax, such of an opinion editorial from the Charlotte Observer, said it would:

  1. Have devastating affects Social Security Beneficiaries with low incomes
    Many argued that seniors on a fixed income just don’t have a lot to spare. Some noted that the tax might be applied unfairly – since it would only apply to those with an additional source of income. They argued that if the additional source of income was very little, those being taxed might have less total income than those surviving solely off of their Social Security benefits and not being taxed.
  2. Make NC less attractive to retirees.
    Publications such as Kiplinger and Forbes often rank North Carolina as one of the best places to retire and one of the reasons often cited is NC’s lack of Social Security Tax. Lawmakers want to continue to make NC attractive to retirees that will bring more wealth to the state and boost the economy.
  3. Be a difficult move politically
    The Raleigh News & Observer ran an article in June which reported that although seniors only make up 13% of NC’s population, they accounted for a quarter of North Carolina voters in the midterm elections. As Michael Blitzer, a political expert at Catawba College said, “that’s a dangerous group to energize…”
  4. Social Security Disability Benefits
    Although many of the arguments centered on retirement, retirement benefits are just one of the many types of benefits Social Security provides. According to a recent press release by the Social Security Regional Commissioner in Atlanta, disabled workers and their dependents account for 19% of the total benefits paid, while survivors’ benefits account for 11%.Since disability and survivor SS situations are seen as especially dire, many of these recipients are not even taxed at the federal level – although in situations where they’re receiving a significant source of additional income, they may incur taxes.

Do you need Social Security Disability Benefits?

If you’re filing for Social Security benefits, you may have a better chance of getting a favorable result when you hire an attorney, according to the National Organization of Social Security Claimants’ Representatives (NOSSCR).
At the Law Offices of James Scott Farrin, we have an entire department dedicated to helping disabled workers in North Carolina with their Social Security Disability claims.

If you, or a spouse, cannot work and have been denied Social Security Disability benefits, talk with one of our North Carolina Social Security Disability lawyers today. Call us at 1-866-900-7078 or contact us online for a free case evaluation.

Please note that the attorneys at The Law Offices of James Scott Farrin are not tax attorneys or CPAs and we recommend consulting one of these professions prior to making any decisions or changes to your tax filings.