Does Your Retirement Plan Know Your Social Security Could Be Taxable?
When planning for your retirement, it’s necessary to consider your income needs compared to your living expenses during your golden years. And as you probably already know, Social Security will play an important, if not crucial, role in your retirement income plan. But, what far too many retirees don’t realize is that your Social Security benefit may very well become taxable income, and higher income tax means less disposable retirement income for you.
Social Security benefits have, since 1983, been taxable if your overall “provisional” income exceeds a certain level. When taxing of SS benefits was first made law, up to 50% of your benefits could be taxable if your provisional income (from all sources) exceeded $25,000 as a single IRS filer, or $32,000 if you file “married-jointly.” Then in 1993, an additional threshold was added to make up to 85% of your SS taxable if your income as a single exceeded $34,000, or $44,000 as a married couple. Unfortunately, this comes as a surprise for many retirees.
This article by Christy Bieber appearing in The McDowell News (NC) explores the question of taxing Social Security benefits – how it works and how much you might pay. Click here to read more.