Q & A
Do You Have to Pay Income Taxes on Social Security Benefits?
Full question: From what I’ve read, if a married couple has annual withdrawals from 401(k)s, IRAs or pensions that exceed a certain amount, their Social Security benefits may be taxed. Is that true?
Answer: You’re absolutely right. When it comes to income taxes, many people think only of the money they earn in a paycheck. But the reality is that there are many other types of income that are subject to ordinary income taxes. And all of that income, in turn, can trigger taxes on Social Security benefits – which can come as an unwelcome surprise. To determine whether your Social Security benefits will be taxed, the IRS uses what it calls your “combined income” – which is the sum of your adjusted gross income (AGI), non-taxable interest, and half of your Social Security benefits. If your combined income exceeds a certain limit, 50 to 85 percent of your benefits may be taxed. Read more…
Source: Carrie Schwab-Pomerantz, CFP , via Huffington Post - 9/24/2014
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