Expert Q&A

Social Security benefits may be taxable if you file as an individual and your total income for the year is between $25000 and $34000. If this is your case, up to 50% of your benefits may be taxable. If, as an individual filer your income is over $34000, up to 85% of your benefits are likely to be taxed.

If you and your spouse jointly report between $32000 and $44000 income, up to 50% of your benefits are likely to be taxable. If you and your spouse report income of over $44000, up to 85% of your benefits are likely taxable.

If Social Security is your only source of income, none of it will be taxed.

You can check IRS notice 703 on the back of your Social Security benefit statement 1099 to determine of any of your benefits are taxable. Note that many states and localities exempt Social Security benefits from taxation. Check with your state taxing authority for a definitive answer.

Retirement is approaching and soon you’ll be faced with the decision when is the right time to take your social security benefits. You then talk to a few others that are faced with the same decision and find out that your social security benefits could be taxable. Say what!? Yes, it’s true.

Some people are quite surprised when they learn that their social security income can be taxed. Not knowing this in some instances people may have not factored that into their retirement planning. This can make a substantial difference. Often enough as well people may continue working not realizing they are able to collect social security benefits. Generally speaking, yet there are always exceptions to every rule, if your only income is from social security chances are your benefits will not be taxed and you may not need to file a tax return. If you do have other sources of income in addition to your social security then you may be required to pay taxes on your benefits. Certainly an area that requires looking at closer.

You can read more at my blog: http://www.goodfinancialcents.com/social-security-benefits-taxable-retirement/