# Income Taxes And Your Social Security Benefit Information



## SeaBreeze (Oct 25, 2018)

I haven't applied for Social Security yet, but I was looking around at some information about it.  More at the Social Security website here.  



> Some of you have to pay federal income  taxes on your Social Security benefits. This usually happens only if you  have other substantial income in addition to your benefits (such as  wages, self-employment, interest, dividends and other taxable income  that must be reported on your tax return).
> 
> 
> You will pay tax on only 85 percent of your Social Security benefits, based on Internal Revenue Service (IRS) rules. If you:
> ...


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## mathjak107 (Oct 26, 2018)

the taxing of ss is very complex once you exceed the limits .


_If your combined income exceeds the threshold amounts, an IRS formula is applied to determine how much of your benefits are taxable. The result of these calculations will be that you pay taxes on the lower of:_

_85% of your Social Security benefits_
_50% of the benefits plus 85% of the amount of combined income over the second threshold amount_
_50% of the amount of combined income over the first threshold amount, plus 35% of the amount of combined income over the second threshold_ amount


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## mathjak107 (Oct 26, 2018)

keep in mind too that you can get severely taxed  on small amounts once you hit some of the limits . it becomes very trick because you have two moving targets . the more ss that gets taxed the more your income and the more ss that gets taxed ,round and round we go .

you can actually take an extra 1k out of an ira and see what amounts to almost a 50% marginal tax on it . as an example :

Harry is an individual with $36,000 of income but a hefty $22,000/year of Social Security benefits. His Social Security provisional income is $36,000 + $11,000 = $47,000, which is $13,000 over the upper threshold for individuals. As a result, $15,550 of his Social Security benefits are subject to taxation (which is 50% of the amount from $25,000 to $34,000, plus 85% of the excess of provisional income above the $34,000 threshold), which puts his AGI at $51,550. Even after a standard deduction and one personal exemption, Harry's taxable income would be $51,550 - $6,100 - $3,900 = $41,550, which places him in the 25% tax bracket.

If Harry now takes an additional $1,000 from his IRA, his provisional income increases to $48,000, his taxable Social Security benefits increase to $16,400, and his AGI rises to $53,400. The net result: Harry's AGI increased by $1,850 for "just" a $1,000 IRA withdrawal, and with a 25% tax bracket his liability will be $1,850 x 25% = $462.50, which equates to a whopping $462.50 / $1,000 = 46.25% marginal tax rate!


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## OneEyedDiva (Oct 26, 2018)

Last year 16.9% of my SS was taxed. I don't expect any change when I file the 2018 taxes.  I live in N.J. where there's a pension exclusion of up to $15,000. I'm not sure if that was a determining factor.


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## C'est Moi (Oct 26, 2018)

Ugh, I'm dreading taxes for this year.   I made a substantial rollover from IRA to NUA accounts and made a large pre-payment on taxes.    So annoying.


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## Don M. (Oct 26, 2018)

We've been in the 85% SS tax bracket forever....no problem.  I just have some extra held out of the monthly payment, and the other sources of income, and at tax time, crunching the numbers with the H&R Block CD usually results in a nice refund.  Personally, we feel lucky that we are afforded the "opportunity" to be taxed...rather than having to live payday to payday.  I don't get upset about paying taxes....I just expect the politicians to manage that money properly.


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## mathjak107 (Oct 27, 2018)

it is actually the ones in the lower income ranges  , who are skirting these limits that have to be the most careful .

as you see in my example a mere extra 1k in income can see 1/2 vanish in tax  because they crossed certain thresholds marginally . those who are just around these limits for getting ss taxed can be the ones most likely to get burned .

michael kitces wrote an excellent article on the subject .

.https://www.kitces.com/blog/the-tax...ity-benefits-as-a-marginal-tax-rate-increase/


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## Trade (Oct 27, 2018)

Here's an easy online calculator for determining how much of your social security is taxable. 

http://www.gnjpc.com/calculators/y2004/socsec.html


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