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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..

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