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About Taxation of Social Security benefits - ThinkAdvisor
It catches a lot of retirees by surprise – they claim their Social Security benefits unaware that collecting those benefits may very well result in a surprise income tax obligation when they submit their income tax to the IRS. Basically, the IRS says that if your “provisional income” (your total income from all sources, including half of the SS benefits you received during the tax year) exceeds the IRS threshold for your tax filing status, a portion of your Social Security benefits will be included in your taxable income. The first threshold for those filing their taxes as a single is $25,000 $$32,000 for those filing jointly) and if your provisional income exceeds that threshold half of the SS benefits you received during the tax year are included as part of your taxable income. But it gets worse – if your provisional income as a single exceeds $34,000 (or $44,000 for those filing jointly), then up to 85% of the SS benefits received during the tax year becomes part of your taxable income. All of this is fully explained in this ThinkAdvisor article and slideshow by John Manganaro.
Also, if you’re unsure about how these basics apply to you, or if you have any questions about your individual situation under Social Security, note that the AMAC Foundation provides a free-to-the-public advisory service to help Americans navigate the complexities of this program. All questions are answered quickly, at no charge. Learn more about it here…