Tip 4: What is the Taxability of Your Social Security Benefits?
Over the last few blog posts, I’ve reviewed important year-end information for you. Now we’re back to our “Nuts & Bolts of Social Security” blog series…
Social security benefits may be taxable…
This is the 4th tip in our series entitled: “The Nuts & Bolts of Social Security in 7 Easy Tips.”
…based on your modified adjusted gross income.
Modified adjusted gross income includes
- Reportable income plus ½ of social security benefits received
- Tax-exempt interest
- Exclusions for qualified US savings bond interest
- Adoption benefits
- Foreign earned income
- Allowable IRA deductions
One notable exclusion from modified adjusted gross income is ROTH IRA distributions. Watch this in the future… as ROTH IRA’s become more popular, planning around distributions from ROTH IRA’s can save tax dollars.
If modified adjusted gross income (MAGI) exceeds the base amount, benefits become taxable.
Single and Head of Household taxpayers base amount is $25,000, up to 50% of benefits will be taxable if MAGI is between $25,000 and $34,000, and up to 85% of benefits will be taxable if MAGI is above $34,000.
Married filing joint taxpayers base amount is $32,000, up to 50% of benefits will be taxable if MAGI is between $32,000 and $44,000, and up to 85% of benefits will be taxable if MAGI is above $44,000.
“The Nuts & Bolts of Social Security in 7 Easy Tips” is also available as a FREE eBook at my website: www.Makara-Assoc.com/ebooks/.
Contact me or give me a call at (239) 384-9688 with any further questions about your social security benefits.
– Mark
This information is based on facts, assumptions and representations as stated and authorities that are subject to change. We will not update this information for subsequent legislative or administrative changes of future judicial interpretations.
LEGAL NOTICE AND DISCLAIMER: The information within this blog is for informational and educational purposes only and is not tax advice and should not be used as such. The facts of each individual situation can have significantly different outcomes when applying tax law. The hiring of a CPA is an important decision not to be based solely on advertisements.
