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Despite the new tax rate reductions belonging to the Jobs and Growth Tax Relief Reconciliation Act of 2003, helpful ideas marginal tax bracket for many retirees is a whopping 46.3%. Why? Because Social Security benefits are subject to income tax bill. Those affected are Social Security recipients who have enough good fortune (misfortune?) to get subject to both the 25% income tax bracket as well as the 85% inclusion rate for Social Security benefits.

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What I think does not matter as much as what the inner Revenue Service thinks, and also the IRS position is crystal clear: Tips are taxable income.

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