MinistryCPA Special Topic: How Will My Social Security Benefits be Taxed?

Question:

I am 64 years old and planning to retire at 65, which is my full retirement age (FRA). Once I begin collecting Social Security benefits, will those benefits be taxable? If so, to what extent?

Answer:

Social Security benefits may be subject to tax, depending on your combined income for a given year. Combined income equals the sum of adjusted gross income, tax-exempt interest, and one-half of SS benefits. The percentage of tax is based on this total combined income.

Up to 50% of SS benefits may be taxable if combined income exceeds:

$25,000 if filing as an individual
$32,000 if married, filing jointly

Up to 85% of benefits may be taxable if combined income exceeds:

$34,000 if filing as an individual
$44,000 if married, filing jointly

Note: Most married taxpayers who file separately will pay taxes on their SS benefits regardless of combined income level, unless they lived separately the entire year..

Source: Social Security: Retirement Benefits

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MinistryCPA - Corey A. Pfaffe, CPA, LLC

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