How is Social Security Taxed?

With tax time approaching, some of you have asked if the social security payments you receive are taxed. The answer is yes if your annual income is above a certain amount when you’re receiving those payments, and because the income threshold is relatively low, it’s likely that some of your benefits will be taxed. The percentage of tax is calculated off of your combined income if married and filing jointly, or as a single filer. The question then becomes what is “Combined” income? “Combined” income includes your adjusted gross income, nontaxable interest and one-half of your annual Social Security benefits. We always suggest you speak with your accountant to determine how much to withhold over the year so that you are not caught off guard with a large tax bill, understanding that you can change it year to year. As with every decision that affects your retirement income, you’ll want to make the right choice. We’re here to help you do that when it comes to finding products that provide an income stream you can’t outlive. We look forward to hearing from you.