Yes, if you did not already know, your social security is taxable. You may ask, why are they taxing a fixed or limited income? We will break down the process for you and give you an idea of how much you may be taxed.
What you need to know to calculate taxes on your Social Security
Taxpayers with provisional income (adjusted gross income + nontaxable interest, one-half of your Social Security benefits and some other adjusted gross income add backs) below the base amounts of $25,000 and $32,000 are not subject to federal personal income tax on their Social Security benefits, while taxpayers with income above these amounts will find that tax applies to some percentage of their benefits.
For joint filers with incomes under an adjusted base amount of $44,000 and other filers with incomes under $34,000, up to 50% of Social Security benefits may be subject to tax. For taxpayers with provisional income above this adjusted base amount, up to 85% of benefits can be taxed.
What this means, is that if your income is over the adjusted base amount ($34,000 or $44,000), you first calculate taxable social security up to the adjusted base amount. Then provisional income above the adjusted base amount is taxed at the higher rate of 85%. So people with provisional income above the adjusted base amount now have to calculate two tax amounts-- one for income up to the adjusted base amount and one for income above it, and then add the two tax amounts together. The total amount of Social Security benefits subject to tax is the lesser of
this calculated amount and 85% of your actual Social Security benefits.
To sum it all up: The more you make the more you will pay. Even in retirement. If you make under $34,000 a year at retirement; then the government can only tax up to 50% of your Social Security. If you make over $34K at retirement; the government can tax up to 85% of your Social Security. You may retire from work, but you never retire from taxes.
To get all the details on this taxing question, click here.
