Baby Boomers (those born between 1946 and 1964) have found out some hard lessons recently about how easily their retirement money can disappear. One thing they may not have counted on is how much they may be taxed on Social Security benefits.
According to the Social Security Administration Website, the guidelines for paying taxes on social security include:
- file a federal tax return as an “individual” and your combined income* is
- between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
- more than $34,000, up to 85 percent of your benefits may be taxable.
- file a joint return, and you and your spouse have a combined income* that is
- between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits
- more than $44,000, up to 85 percent of your benefits may be taxable.
Many adults receive social security as their only form of income. If that is the case, there income level would be low enough that they would not have to pay taxes or even file a tax form. See topic 423.
For individuals who are lucky enough to have saved a few bucks for retirement, check out the following articles for help to avoid having to pay this high percentage:
- When Uncle Sam Wants His Money Back
- Avoiding the Social Security Tax Trap
- History of Taxation of Social Security
- AARP: Social Security and Taxes
- How Much Social Security Benefit May Be Taxed