Over the course of your career, you'll probably have tens of thousands of dollars in Social Security payroll taxes withheld from your paychecks. Workers are confident that by paying those taxes up front, they'll be able to collect Social Security benefits for the rest of their lives when they decide to retire, and that's a fair trade-off for the financial security and peace of mind that those benefits will give them.
Shockingly, the federal government forces some Social Security recipients to include a portion of their benefits in their taxable income. That's offensive to those who feel like they've already paid their taxes to earn those benefits. However, taxpayers can at least take some comfort in the fact that the vast majority of states don't add insult to injury by adding state income taxes on what their residents get from Social Security. Below, we'll look at taxes on Social Security more closely to see what you can expect -- and a move might be smart.
Why you might owe federal income tax on your Social Security
The federal government has rules that it uses to figure out whether you have to pay tax on your Social Security benefits. Only those recipients who have countable income above certain limits have to worry about benefit taxation at all, and even for those who are subject to the tax, only a portion of those benefits are counted.
There are two key things to keep in mind:
Shockingly, the federal government forces some Social Security recipients to include a portion of their benefits in their taxable income. That's offensive to those who feel like they've already paid their taxes to earn those benefits. However, taxpayers can at least take some comfort in the fact that the vast majority of states don't add insult to injury by adding state income taxes on what their residents get from Social Security. Below, we'll look at taxes on Social Security more closely to see what you can expect -- and a move might be smart.
Why you might owe federal income tax on your Social Security
The federal government has rules that it uses to figure out whether you have to pay tax on your Social Security benefits. Only those recipients who have countable income above certain limits have to worry about benefit taxation at all, and even for those who are subject to the tax, only a portion of those benefits are counted.
There are two key things to keep in mind:
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