Seven Social Security Tax Examples
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How much of your Social Security will be taxed?
Social Security, a government program that provides financial benefits to retirees, disabled individuals, and the surviving family members of deceased workers, plays a crucial role in ensuring financial security for millions of Americans. However, many people are unaware that their Social Security income may be subject to taxes. Understanding how much of your Social Security will be taxed is essential for effective financial planning during retirement.
The taxation of Social Security benefits was introduced in 1983 as part of the Social Security Amendments. Since then, the Internal Revenue Service (IRS) has adopted specific rules to determine whether Social Security income is taxable based on an individual’s total income.
To calculate the amount of Social Security benefits that will be subject to taxes, you need to determine your combined income, which is a combination of your adjusted gross income (AGI), nontaxable interest, and half of your Social Security benefits. AGI includes income from wages, self-employment, pensions, rental properties, and certain other sources.
For individuals whose combined income is below a certain threshold, their Social Security benefits will not be taxed at all. As of 2021, the threshold is $25,000 for single filers, head of household, and qualifying widowers, while for married couples filing jointly, the threshold is $32,000. If your combined income surpasses these thresholds, a certain percentage of your Social Security benefits will become taxable.
The maximum percentage of Social Security benefits that can be taxed is 85%. However, the actual taxable percentage is calculated through a tiered system. For a single individual, if their combined income falls between $25,000 and $34,000, then up to 50% of their Social Security benefits may be taxed. If their combined income exceeds $34,000, up to 85% of their benefits could be subject to taxation. For married couples filing jointly, the corresponding thresholds are $32,000 to $44,000 for 50% taxation and over $44,000 for up to 85% taxation.
It is important to note that these thresholds and percentages are subject to change, as they are periodically adjusted for inflation. Therefore, it is advisable to stay updated with the IRS guidelines to understand the current tax provisions.
To simplify the tax calculation process, the IRS has provided worksheets and instructions that can help individuals determine the taxable portion of their Social Security benefits. Additionally, tax software and professional tax advisors can assist with accurate calculations and provide valuable advice.
While taxes on Social Security income can reduce the overall cash flow available to retirees, it’s crucial to remember that Social Security benefits are designed to supplement other sources of income during retirement. By understanding the tax implications and carefully planning your finances, you can effectively manage your retirement income and ensure financial security.
In conclusion, being aware of how much of your Social Security will be taxed is an essential aspect of financial planning for retirement. By understanding the thresholds and percentages set by the IRS, as well as using available resources, individuals can accurately calculate the portion of their income that will be subject to taxation. This knowledge enables retirees to make informed decisions and effectively manage their finances, ensuring a comfortable and stable retirement.
I've watched two of your videos and understand Social Security better than ALL of the other explanations I've heard on YouTube. Thank you! I'm a subscriber!
I'm close to FRA and I have a 401k at my job, what if I took a lump sum on the 401k before I retire, could I be tax free then?
So I only pay tax on the portion of my assets i liquidate in the tax year and my tax rate has nothing to do with my total net worth?
Hello, quick question, I am a 62 yo retired Federal employee. I get a monthly annuity and have Federal tax taken out of that. My wife still works and has Federal tax (10%) taken out each paycheck. This past year we got a Federal tax refund of over $2k. Since I turned 62 two months ago, my SSA Supplement ended. Starting this month I will begin receiving my Social Security benefit payment which works out to be about $700 more than my SSA supplement was per month. My question is, since my wife and I received a good amount from last years Federal tax return, am I required regardless to have additional Federal tax taken out of my Social Security benefit even if I think we are paying adequate Federal Taxes on our income? Thank you.
Question: Do the taxes get removed when the checks come out or do we need to save for these taxes and pay with our income tax?
How do you figure the provisional income? what a bad deal.
Is social security still taxes as much if you use it to pay medical insurance if you are not old enough to qualify for Medicare?
what does "Provisional" mean?
Do people with decent pensions have any way to reduce the percentage of SS benefits being taxed to below 85 percent?
Subtitle C social security taxes according to the US Treasury Secretary is triggered upon a "privilege" or in layman's terms an excise tax, which the average American making domestic source income does not qualify.
If I've already paid taxes on the money I paid into social security, why do I have to pay taxes again when I get it back?
Thanks for great information. I am 65 and my wife is 64. By end of the year I am going to collect my ssi and retire from my job with a pension my ssi would be around $1600+$500 for my wife and $1500 pension. How do I calculate if I have to pay taxes?
I live on Georgia.
Thanks as always.
Yours,
Awe, was hoping you do CA
SS benefit 1 + SS benefit 2 + pension = 75,132, where do you get 71,400?
Back to the drinking game! Every time he says sochacurity, take a shot.
Excellent, excellent. I have a question and I will deeply appreciate it if you answer my question. Let us assume, I was born in August of 1958, and I will retire, God willing, at the age of 70 in 2028. in 2022 COLA was 5.9%, in 2023 it was 8.7%, in 2024 it looks like it will be 2.7% and let us assume that in the following years, each year, COLA will be 1%. So, if we add them the result will be 21.3%. Will COLA total 21.3%, be added, to my social security annual check which, let us assume, will be $35,220 ? 21.3% + yearly SS amount $35,220= $42,697.6 ? I am just asking, I do not know the mechanics. Thanks in advance.
You can thank Joe Biden for taxing SS back in 1983 and 1993 he was a major player in implementing and then raising the tax on social security.
Vote out Democrats dummies. Duh!
Could you mail me the forms to enable me to recieve ssi i dont want to put my info on the internet ive subscribed and have been watch your videos they have cleared things up for me and i thank you very much
So depending were you live will very in taxes.
I don't understand why am I being taxed on SS when I was not given the option of putting that monies in the stock market so I could have had a lot more money…if you made me pay into SS from my pay, then I SHOULD NOT have to pay any taxes
Wait, how does the wife have that much benefit? Max she should get is half of his?
Omg Question live in. GA will received my ssn in oct single working for 90,000. Per year my expected amount to received will be $2400,09 How much tax will I be paying back?
How do you get the numbers @ 4:17? Looks like AGI is $89,890, – $25,900 (std deduction) = $63,990 taxable income. Total tax = $7,266. (using 2022 1040). What am I missing??
Are you kidding and we can't pass it on like Europe if we die early? This is robbery
i recive ss $2,571.00 l am 66 and still working my anual job in a year is $69,000.00 my wife does not work she gets $932.00 she is 63 i am in my job on my w-4 am single and put an extra $100.00 per pay period how would my situation work thank you
What if one spouse is strictly civil service retirement and one is minimum social security benefit?
What about state tax on SS income?
Thank you, Ronald Reagan, for signing into law a tax on social security, putting further strain on Seniors. "Government is the problem"? Yeah, and you were part of it.
Awesome content!!!! I much rather watch these videos than all of the other videos that do not benefit me at all.
Thanks Mr Martinsen. I truly appreciate you providing information that is help to US ALL. Im 53 years old and I was exploring the possibility to retire at 56 but this information is very helpful. I have two choices now…continue to work until 62 or retire at 56 and move to another country.
The politicians (ron reagan), are taxing the devil out of us!