Here’s Exactly How Social Security Gets Taxed

Social Security is an important income source for retirees, but understanding how it is taxed can be confusing.

Key Takeaways:
➡️ Social security is subject to the same federal taxes as other sources of income, but only a portion of it is included in your taxable income based on your provisional income.
➡️ If Social Security is your primary or sole source of income, you may be in a lower tax bracket, resulting in a smaller percentage of your benefit being taxable.
➡️ Provisional income thresholds are not adjusted for inflation, meaning that over time, more people will have a larger portion of their Social Security benefit subject to taxation.
➡️ While federal taxation rules apply nationwide, not all states tax Social Security benefits.

By considering factors such as your provisional income, other sources of income, and state-specific tax laws, you can make informed decisions to optimize your financial situation.

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⏱ Timestamps ⏱
0:00 Intro
1:35 Provisional income
3:18 Example
5:18 Key takeaways
7:21 Example
9:50 Varies by state
11:12 Outro

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[JD-tntb]

James Conole is so good at explaining things. Such a brilliant financial person.

[stevencole]

Wow . Someone who really explained how ss and taxes work in a smimple step by step peocess . It seems many try to make it more complicated than it has to be .

[topofmindwithterri]

This is why getting help from a tax professional is so important. Great video.

[TheDealHunter]

James - I love your content. I would like to point out that, starting in 2022, Colorado no longer taxes Social Security benefits for people 65 or older. They still have a $24k deduction for pensions, annuities and IRA withdrawals.

[janethunt]

Great explanation! Thank you for all the examples and your commentary on this. Heading for your next video now!

[johnscott]

It should be noted that the thresholds for figuring up your taxable Social Security were deliberately excluded from adjustment from inflation. The idea was to gradually introduce the taxation of Social Security until eventually nearly everyone would have to pay some tax on their benefits. This tax is getting to be a larger and larger portion of the funding for Social Security. It’s a pretty easy tax to avoid with a little planning. Roth IRA distributions are not included in the provisional income calculation so it is quite possible to have a six figure income and still pay no taxes.

[anthonygallo]

Your video was definitely point on. But as a person who worked my whole life was receiving a healthy pension and my wife work a whole life and is also receiving a pension I was curious how social security would text me because this year I had to pay the government an additional $28, 000 on top of the $4, 000 overpayment I gave them and the taxes that were coming out of my check all along. So to make a light of your video if I was a migrant coming into this country I would receive more money and pay less taxes than somebody like me who worked my entire entire life!!!. Great job and explaining it I can't wait to get back to my account and see why I had to pay so much money this year thank you so much

[CorvetteGuy]

The other thing to know is that your SS "benefit" is your total benefit, i.e. gross before Medicare premium is deducted. So yes, you can end up paying taxes on the portion of your SS benefit that is pealed off to pay your Medicare premium.

[yazminmojica]

Thank you, excellent presentation 👍💯💕

[papasquat]

Those earning less than $100K/ year (over 60% of workers) don't stand a chance. Between not understanding how to effectively contribute to Roth v Traditional + something in a brokerage, all while paying increasing costs of living, puts them (intentionally on the part of the tax man) in a position in which they are likely to get completely wiped out by taxes in retirement.
Thank you James for posting these videos, especially for those who cannot afford a CFP and are trying to make the right decisions during their working life.

[SantSrinivasan]

How about short term and long term capital gains? Are they added to provisional income?

[GumperVanLier]

You say gross income but my research says adjusted gross income.

[jpsmusicandmore]

When you and your company pays the 15, 3% of my lifetime income to Social Security I do not consider it a benefit. But I love your videos and also your podcast. They are great straight forward and helpful thank you.

[zedsdead]

Could you do a video or answer a question on Railroad Retirement. Specifically how is Tier 1 taxed on NSSEB/SSEB. I believe Tier 2 is just like a pension and taxed at your federal rate.

[rickrangel]

@James Conole, CFP Well explained! Thank you for sharing.

[annamartino]

That's great explanation why CFP and CPAs are telling for years that Taxes are going Up especially for those who are not realizing why and what's causing it. That how more and more Social Security Income is being automatically Taxed as designed of course for those who diligently saved and invested. 50-85% of Social Security Income is Taxed and inflation has no impact as designed for years. Sweet! ❤😂

[LamNguyen-qbic]

Thank you James for explaining how ss tax work. I really like your Chanel 👍.

[johncurtis]

A good, cogent, explanation. Thank you.

[brindacockburn]

Would be nice if you showed visual examples

[jeffjuhre]

How about long term capital gains? Even though they are not taxed (up to $94k MFJ) I think they are included in the provisional income for calculating the taxable portion of Social Security benefits, right?