FEDERAL TAX CODE Lessens Benefits of Senior Work Program; Over 70 Abatement May Be Better Option
Groton seniors who participate in the Senior Work Program will soon receive a letter from the town informing them that they and the town are subject to the Federal Tax Code that considers those in the program as 'employees' and thus are subject to withholding of FICA and taxes. Also as employees they must contribute 7.5 percent to the town's retirement plan, although they can request a distribution of that money at the end of the year. There are no taxes withheld at the state level.
The Senior Work Program was adopted by voters in 2002. Those seniors who participated in the program would get $500 deducted from their real estate tax bills, but they had to work sufficient hours at minimum wage rates to earn the deduction.
The town set aside $20K for 40 slots for the program. Initially seniors were admitted to the program on a first come/first served basis, but with the rush to sign up, the result was that many of those eligible who couldn't get to the backdoor of town hall in time to race into the Assessor's Office promptly at 8:30 a.m.to sign up, were eliminated from the work program
As the program matured, an income limit was set in order to participate; $65K for a single person, and $75K for a married couple. There is also a stipulation that participants own their own homes. But, when the number of income-qualified applicants did not reach the 40 allotted slots, the town officials accepted those with incomes in excess of the stated criterion.
Town Accountant Patricia Dufresne told the Board that there is some administrative paperwork associated with adhering to the Federal requirement and for what amounts to 'small money'. "We will notify seniors in the program about this and see if they want to continue," she said. She added that many towns have done away with this program, and in some towns there are only six or seven participants. She also noted that many of the clerical functions that were done by seniors have gone away, and many of those remaining require technological skills.
Senior Work Program participants will have to be appointed as employees, receive W2s, show their birth certificate, make a Social Security disclosure statement, and participate in Conflict of Interest training, among other things. "The benefit is not as attractive, because you don't get the full benefit and you also have to pay into Medicare," she said, adding that maybe the town would add another $50 to the amount, but any change would have to be approved at Town Meeting.
Assessor Rena Swezey advised that there is another mechanism designed to help seniors called the Over 70 Abatement Program. This program is income and asset based, and allows the abatement for singles with an income of $20K per year, and $30K for a married couple. She suggested that this program could be extended to a lower age, such as 65 years old.
Selectman Peter Cunningham said he wanted to see more discussion of the program and how to reach seniors with the greatest need. He asked Dufresne to collect more data on how many seniors are at the lower end of eligibility for the Senior Work Program and how many might benefit from lowering the age for the Abatement program.
Town Manager Mark Haddad suggested that they report back to Selectmen at their Feb. 25 meeting with an analysis of the program and potential changes.