One of the most commonly confusing matters among most retirees I work with is the income taxation formula and what causes them to have to pay income tax on their social security.
You may have noticed on line 20 of your Federal 1040 return there is a space for social security received and then over on the right hand column of the form the “taxable portion” is noted.
Have you ever wondered how the calculation is formulated and what you may or may not be able to do about paying taxes on your social security?
There are key components of that formula which is driven by the income on your tax return other than social security. The formula contains income thresholds which cause social security to become taxable.
It is often possible to manage away the taxable portion of your social security income with solid tax planning.
As I often say, “It’s not what you make, it’s what you keep.”
To help better understand how you may keep more of your social security income, click here:
© 2017 Jane B. Smith, CFP®