You may need to pay income taxes on a portion of your Social Security benefits, based on your income. But knowing the rules and a few key strategies can help you minimize the tax hit.
Whether or not your Social Security benefits are taxable depends on your “provisional income.” This number is calculated by taking your adjusted gross income (AGI), not counting Social Security benefits, and adding in nontaxable interest and half of your Social Security benefits.
If your provisional income is below $25,000 and you file taxes as single or head of household, or less than $32,000 if you file a joint return, you won’t owe taxes on your benefits. If your provisional income is between $25,000 and $34,000 and you’re single, or between $32,000 and $44,000 and you file jointly, up to 50% of your benefits may be taxable. If your provisional income is more than $34,000 and you’re single or more than $44,000 and you’re married filing jointly, up to 85% of your Social Security benefits may be taxable.
For details about how to calculate your taxable Social Security benefits, see the worksheet in IRS Publication 915, Social Security Benefits. Also see the Social Security Benefits Planner: Income Taxes and Your Social Security benefits.
The key to limiting taxes on your Social Security benefits is keeping your taxable income below certain thresholds. Consider these five tactics.
Whether or not your Social Security benefits are taxable depends on your “provisional income.” This number is calculated by taking your adjusted gross income (AGI), not counting Social Security benefits, and adding in nontaxable interest and half of your Social Security benefits.
If your provisional income is below $25,000 and you file taxes as single or head of household, or less than $32,000 if you file a joint return, you won’t owe taxes on your benefits. If your provisional income is between $25,000 and $34,000 and you’re single, or between $32,000 and $44,000 and you file jointly, up to 50% of your benefits may be taxable. If your provisional income is more than $34,000 and you’re single or more than $44,000 and you’re married filing jointly, up to 85% of your Social Security benefits may be taxable.
For details about how to calculate your taxable Social Security benefits, see the worksheet in IRS Publication 915, Social Security Benefits. Also see the Social Security Benefits Planner: Income Taxes and Your Social Security benefits.
The key to limiting taxes on your Social Security benefits is keeping your taxable income below certain thresholds. Consider these five tactics.
Comments