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Your Social Security Benefits May Still Be Taxable - MSN.com
If you plan on working after starting your Social Security benefits, your earnings will still be subject to payroll taxes. It doesn’t matter if you start receiving benefits before or after your full retirement age (FRA); you will continue to pay Social Security and Medicare taxes as long as you continue to work.
You should consider the taxation of your Social Security benefits as part of your retirement plan. If you have no other income besides Social Security, your benefits will most likely not be taxable. When you have other income besides your Social Security benefits, you may pay taxes on up to 85% of your Social Security benefits. The amount of taxes you will pay is based on your Modified Adjusted Gross Income (MAGI). Your MAGI is determined by adding 50% of your Social Security benefits plus non-taxable interest back to your AGI. This catches people off guard, as they don’t realize these two items are added back.
Social Security will withhold taxes from your benefits if you request it, as withholding taxes from your benefits is optional. You can submit a request to Social Security to withhold taxes by signing into your My Social Security Account online, calling Social Security, or submitting an IRS Form W-4V to your local Social Security office.
If you start your Social Security before your full retirement age (FRA), you will also be subject to an earnings limit. The earnings limit ends in the month you reach your FRA, but taxation continues. For some more pointers, click here to read the article by Gabriela Leon on MSN.com.