How is Your Social Security Benefit Taxed in Retirement?

It's no secret that the Social Security system can be complex.

One of the most complex parts of Social Security is how your benefit will be taxed. When S.S. was first put into law, it was said that it wasn't taxed and would never be.

Well, that changed in 1983. Now everyone's benefit will potentially become taxable.

But exactly how much of your benefit will become taxable will depend on the
Social Security Tax Calculation Formula or otherwise known as provisional income.

Understanding this formula is critical to building a tax-efficient retirement income.

In this video, we'll walk through step-by-step examples showing exactly how to determine how much of your Social Security benefit will be taxable and a few strategies you can use to keep that taxable number small.

If you have any questions, don't hesitate to ask them in the comments below.

#SocialSecurity #retirementincomeplanning

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Always remember, "You Don't Need More Money; You Need a Better Plan"

[jamesfeldman]

There's nothing confusing about the taxes on Social Security. You're ultimately paying taxes on top of the taxes you've already paid. See, it's and an example Government Criminality.

[ronl]

Let me get this straight, I’m single and make 30k per year from Walmart so I get taxed on up to 50% of my SS and paying in to SS again because I’m working? WTH?

[orlandoaguilar]

On this subject you have the clearest explanation among all the other videos I have seen. Thank you very much.

[Linda-ncfu]

Finally, a video of this process that makes sense.

[MrJborn]

I'm not sure why someone would be confused by your video. I have been trying to find a good resource to help me understand how Social Security is taxed and this is the best information I have found. It was very thorough, showing several examples of likely situations people would have. It would be easy to plug in your own numbers to come up with the taxable income. I had found other sources of how to figure the what you are calling Provisional Income but I did not understand if you could apply deductions to this taxable amount. The answer you gave was yes, you can. I had thought that any income you received that was not SS was taxed at 50%. Is that just if it is a W2 wage? That is where I still am confused, or did I get incorrect information.
Great video!!

[scottforrester]

Thank you for the breakdown! This is by far the best retirement and tax planning Youtube channel out there.

[MarathonMadman]

This was a great example, mainly because the numbers you are using is what I will be receiving. I could not understand how they came up with the tax liability until you detailed it out. Again, fantastic job with this video.

[rosannanegri]

We already paid taxes when we were working at a job…why is the government double dipping on social security

[davidknoff]

Thank you. Finally, someone explained this correctly, in a manner I can

[fredsalmon]

SS was a tax to begin with and now it’s taxed when they give it back, what a scam.

[SilverHonda]

I’m confused; I thought social security don’t touch your IRA ? I have a Roth IRA and Roth 401k

[minhkha]

Ahh now I understand. Thanks so much!

So basically, I wouldn’t need to pay taxes on Social Security if I don’t go over the $25k threshold as a single filer. That would mean I should be careful about how much I take out of taxable accounts (IRAs, 401ks, capital gains, etc.). If I desperately need the money, I should just take distributions out of a tax-free account (such as a Roth IRA) because it wouldn’t be counted towards the provisional income?

[Tzevorex]

Thanks so much for your video. I loved your video❤❤❤, very well explained. Finally, I understood how they calculate on SSA

[crystalline]

There should be no taxes paid by our grandparents, they paid enough already. Who decides that just because they are a single person their expenses are not real. ? The mortgage or the rent, utilities, are not based on single or married, If with their body aches and pains they are lucky enough to get a very much needed job they should NOT be penalized with paying taxes .

[rochditidjani]

Excellent explanation. I didn't know about the 85% tax range. Thank you for the thorough examples.

[melissastewart]

Thanks. We really appreciate the clarification.

[petersancinito]

Very eye opening indeed! Nice breakdown and a thorough, easily understood explanation which is, as always, a trademark of your videos! Thank you!

[TraceElements-tike]

Absolutely stunning in the way you layed it out. Much

[SantaBarbaraAlberto]

Yes, it is more desirable to have a larger social security benefit due not only to the favorable taxation but also for the inflation adjusted treatment.

Now, SS benefits are subject to changes by Congress. So, this makes it volatile as the deal can change at any time or cut the benefit as needed. Same with portfolios, they are at wimps of the markets. Risk Volatility is a problem in both cases. SS benefits are the lesser of two evils.

[snowdenc]

Can you please add an example using $30K social security + $100K taxable income, where provisional income = $115K.
I see there is another comment below from Tein Bao with the same question.
Question: How is a provisional income of $115K used in the married table to calculate the amount of taxable social security of $25, 500 ($30K SS x 85% = $25, 500)?
When is it simpler to just multiply the SS amount ($30K) by 85% to get the taxable SS amount ($25, 500), rather than use the married table calculations in the video?
Answer: Patrick's answer to Tein Bao's question below also answers my question.
In summary, the taxable SS amount is the SMALLER of either
a.) the result calculated from the formula in this video, or
b.) 85% of the SS Benefits ($25, 500)