Our income is taxed for social security, but can social security itself be taxed? That’s a good question, and we put together this guide to answer it! Find out everything you need to know about your retirement benefits before consulting Maggi Tax for social security planning near you!
Social Security Can Be Taxed. Here’s How It Works:
First, let’s take a moment to fully understand what social security entails. Social security is the benefit you receive when you enter retirement, often consisting of monthly checks, funding for surviving spouses, and compensation for those with disabilities. A portion of the taxes that we pay as income earners go towards this benefit, giving you something to look forward to when you retire.
Depending on your household income, you may have to pay taxes for your social security benefits. As of the time of writing, the limits are as follows:
- Individual taxpayers earning between $25k and $34k may be taxed on up to 50% of their SS benefits.
- Individual taxpayers earning over $34k may be taxed on up to 85% of their SS benefits.
- Taxpayers filing jointly earning between $32k and $44k may be taxed on up to 50% of their SS benefits.
- Taxpayers filing jointly earning over $44k may be taxed up to 85% of their SS benefits.
With constant changes in the economy and tax regulations, it’s normal for people to be worried about their retirement savings. If you believe that your funds might not be enough to cover the cost of living in retirement, read our guide on things to keep in mind when saving.
Tips For Combating Social Security Taxes
If it feels like your social security tax is negatively impacting your ability to save up enough for retirement, there are additional steps you can take to help maximize your taxes and increase your savings:
- Delay Receiving Social Security Benefits
- Consider an IRA Conversion
- Work In Retirement
Did you know that you don’t have to start collecting social security as soon as you hit retirement age? You can compound your savings with each year you put off collecting until age 70 when you are forced to withdraw. The additional benefits you receive by delaying social security may be enough to cover some of your living or medical expenses.
If you currently have a 401(k), you can manage your taxes by converting to a Roth IRA savings account which is tax-deferred. Even if you don’t currently have a retirement savings account set up, beginning with a Roth IRA is a great way to start collecting for retirement on top of having social security benefits.
It’s not uncommon for hardworking individuals to continue working through retirement age. Doing so can help you earn more to put toward your overall savings, thus helping you fund your various expenses when you finally decide to retire.
Learn more about how working in retirement affects your Medicare and Social Security benefits.
Maggi Tax Can Guide You Through the Topic of Social Security
Social security can be a complicated topic, but Maggi Tax is here to offer a wealth of knowledge and expertise on the subject. Call us today at (727) 799-1701 to schedule a consultation for social security planning services near you!
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