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Question for the Money Doctors

Question submitted on Apr 16, 2019.

Question

I reach my FRA (full retirement age) this sept 2019, I am 66. If I were to start taking Social Security next year in 2020 when I turn 67, I heard the the Social Security benefits I receive when I am 67 are not taxed. Is that the case? how does the Fed tax you on Social security benefits after you reach FRA?

Answer

Thank you for your good question on how Social Security benefits are taxed.  For Federal purposes, the income taxability of Social Security benefits has nothing to do with your age.  The taxability has to do with whether your filing status is married filing joint or single and the amount of other taxable income you report.  The higher your combined income, the higher the amount of Social Security benefits that are taxed.  The maximum percentage of Social Security benefits that are added to federal taxable income is 85%.  Each state has a different formula for taxing social Security benefits, and many states exempt Social Security benefits from taxation.

Here is a link to the Social Security website that describes the Federal taxability of Social Security benefits in more detail.

https://www.ssa.gov/planners/taxes.html


For additional information visit http://www.360financialliteracy.org/

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