You can only spend the dollars you keep, so you need to understand the rules about taxes on your Social Security benefits.
Social Security benefits haven’t always been taxable. From the first Social Security payment in January 1937 all the way to 1983 Social Security benefits were completely tax free. But that all changed with the passage of 1983 Amendments to the Social Security Act. Under this new rule, up to 50% of Social Security benefits became taxable for individuals with a certain level of income. 10 years later, the Deficit Reduction Act of 1993 expanded the taxation of Social Security benefits. Under this Act, an additional bracket was added where up to 85% of Social Security benefits could be taxable above certain thresholds.The combination of these two laws left us with the current tax structure on Social Security benefits where today, somewhere between 0% and 85% of your Social Security payment will be included as taxable income.
In order to determine how much of your Social Security benefits will be taxable, you first have to know how to calculate your “combined income” – a measurement of income used specifically for this purpose.
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Resources
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This is our Ultimate Social Security Cheat Sheet! It takes the essential information from the 100,000 page Social Security website and condenses it down to just one page!
My article and video – Double Tax on Social Security
SSA webpage on taxation of benefits
IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits
See Disclosures Below
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I am an actual practicing financial planner, but I’m not your financial planner. Don’t take what I say as specific advice for your situation. Please consult with your own tax, legal and financial advisors.
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⚠️I am not an attorney or SSDI advocate. Furthermore, since I don’t really know you, I can’t give you advice. Please don’t take this video as specific advice for your specific situation. Consult your own tax, legal and financial advisors. If you want to find out more about officially hiring me for non-SSDI related stuff, check out
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Next…check out my video "The Double Taxation of Social Security" https://youtu.be/73If0twDDRM
No taxes on Social Security under 50,000.00
Does NC tax social security?
Best explanation I've seen so far on YouTube. Thank you sir.
Well, here we are in October 2022 and you are correct about those limits not being changed. And of course, tomorrow, I believe they are announcing the 2023 COLA bump and so folks are gonna get hit even more with the taxes on 2023 income.
So, to confirm what I saw, the couples Adjusted Gross Income is as follows?:
21300 – taxable portion of SS
24000 – pension
20000 – ira dist
======
65300 = AGI?
To your question, if benefits are going to be taxed in any way, then at the very least the thresholds need their own COLA bumps every year or two.
What about my Roth IRA and Roth 401k ? Will social security tax me on them ?
yes but not s.s.
As an economics student, I’m going to do some serious research about this. The whole idea of taxing social security sounds extremely rediculous
Social security should not be taxable
If I inherit an IRA today and took out say 5 equal payments of say 100,000 over my yearly pay of 50,000 giving me a combined total income of 150,000 yearly for five years. Will this increase my SSI when I retire in the 6th year?
Nice video. Thanks for posting. I am retiring soon and I have been trying to educate myself on what to expect in retirement. I was pleasantly surprised to learn that once FICA, and Medicare taxes are removed from the equation, my tax liability will drastically be lowered. Of course Medicare premiums and associated Supplemental Medicare cost will offset some of the tax savings, but as most employees, I've been contributing to my health insurance premiums for many years now. As far as taxation of SS Benefits, as I understand it, FICA is paid with after tax earnings, so yes, it's double taxation!
No! It was taxed when earned and taxing again is double taxation. It is a shame that SSA recipients must pay tax on the only income they have, in many cases.
So this SST is what was taken and not replace when the government wanted money?
No I don't think we the seniors should have to pay taxes on our social security it is not fair it takes every penny we get to make it prices now on gas groc.and thing else it is not funny
I don't think it's right for our social security to be taxable when we only draw so much a month when you have bills to pay gas and groc.to buy every thing is so high now it's not even funny
Can anyone help me connect a couple of dots? at 6:43 he says that Phil and Donna will be taxed on 71% of their benefit. But here is the math that I am tracking:
They will received $36,000 in benefits
They will be taxed on $21,300
$21,300 is 59% of $36,000. So where did he get 71% from?
This is going to result in protests and demonstrations, possibly riots.
What do you expect! The IRS is a right wing entity.
This continues to show how corrupted the government is. Taxing SSI benefits is a way for the government to rob our senior citizens of their livelyhood. It's a right wing Republican plot.
Do single people get to cut their SS payments in half or is that only for married people because there are 2 people?
All of you guys that do these social security calculations leave out the standard deduction where does that fit in why do you keep leaving it out I think it's around just under $13,000 but none of you guys talk about it
Where does the standard deduction come in. Right now for married filing jointly it is approx. 25,500 taken off the top for the adjusted gross income the follow the tax table. Hard to find an answer to this question. Thanks
Why are all these tutorials nothing at all for single people.
Question: Are 'SS benefits for a minor dependant' & 'SS benefits for a spouse caring for that dependant' subject to tax? Thank you.
No it shouldn't be taxed but the threshold needs to be increased….I am thinking of collecting at 62 work part time for health insurance increase the % into 401k to decrease my income for 3 years until 65 stop working and use my other retirement accounts like 401k, roth and traditional iras…my biggest expense being my home will be paid off before I even start collecting ss…
In your example of the couple (6:41 minute mark) having $21,300 in taxable income, isn't that amount then taken to the tax forms and subtracted from the $27,000 standard deduction available to people and then since it's less than the standard deduction it is not taxed? Am I missing something here?
It should not be taxed as we've been taxed already on this
no rules all get the same treatment no taxes on social security tax the lobbyists lawyers and CEO's to pay for the workers who built thier empires.
Thank you great information. Did not know and well explained
Here is some confusion: let’s say pension for married couple is 36k, (same as your example). If IRA is 70k, then combined income is 70+0.5(36)=88k. So taxable income =6k+0.85(88-44)=6k+37.4k=43.4k, which is greater that the social security income of 36k!
Hell no!!!
What does UPAF MEAN ON W-2
Taxing social security is just another way of punishing people that saves like they should have to create a decent retirement.
These is what happens with politicians who are criminals figuring out how too steal from taxpayers
at the least, it should be indexed.
Hi Kevin I come from American Samoa,my social security tax isn't coming,what happen pls