• Skip to primary navigation
  • Skip to main content
  • Skip to footer
Schedule Appointment Client Portal Login

Wisdom Wealth Strategies

Your Retirement Financial Advisors Denver Colorado

  • Home
  • About us
  • Financial Planning
  • Investment Management
  • Tax Planning
  • In The Media
  • Blog & Social
  • Contact Us

Taxes & Your Social Security: How that could affect your retirement income

Blog & Social Media   |   Financial Planning   |   Taxes & Your Social Security: How that could affect your retirement income

Taxes & Your Social Security: How that could affect your retirement income

Are my Social Security Benefits Taxable?

Did you know that your Social Security benefits may be taxed in retirement? Taxation of Social Security income usually occurs when retirees have income in addition to their Social Security benefits, such as wages, self-employment income, IRA distributions, interest, dividends, and other taxable income that is reported on their tax return.

However, the amount of your benefit that is taxed is capped. No one pays federal tax on more than 85 percent of their Social Security benefits. For example, if you receive $10,000 in Social Security benefits in a year, you will pay taxes on no more than $8,500 of those benefits ($10,000 x .85 = $8,500).

What is combined income?

How much of your Social Security benefit is taxed depends on the amount of your combined income in a taxable year. Your combined income is your adjusted gross income + nontaxable interest + one-half of your Social Security benefits. Depending on your filing status and the amount of your combined income, your benefits will be taxes according to the table below.

 

Social Security Benefits, Denver financial planner

 

Social Security Benefit Statement

Once you begin receiving benefits, each year in January you will receive a Social Security Benefit Statement (Form SSA-1099), which will show the amount of income you received in the previous year from the program. The information on your Social Security Benefit Statement will be used when you complete your federal income tax return to determine if your benefits are subject to taxation for that tax year.

Understanding how various income sources are taxed is a critical component of retirement planning. After all, as the old saying goes, it’s not what you make that matters; it’s what you keep!

 

 

wisdom wealth strategies

Andrea L. Blackwelder, CFP®, ChFC and Joseph D. Clemens, CFP®, EA are the founders and partners of Wisdom Wealth Strategies. Their shared passion is simple: to bring financial empowerment, understanding, and peace-of mind to people who wish to improve their financial future, build wealth for their families, and achieve financial independence. Click here to find out more about how you can work with Wisdom Wealth Strategies.

Filed Under: Financial Planning, Retirement, Tax

Interested in Working Together?

We’d love to learn more about your financial needs and answer any questions you have about our practice.

Request a Consultation

Footer

Certified Financial Planner

Social

See what we’re up to by following along on social media.

  • Facebook
  • LinkedIn
  • Twitter

Contact

Get directions
(720) 314-8009

Newsletter

Stay up to date by subscribing to our newsletter.

  • Disclosure
  • Form CRS

Copyright © 2022 Wisdom Wealth Strategies, LLC. All Rights Reserved.
Wisdom Wealth Strategies, LLC is an SEC-registered investment adviser. Our firm is notice filed in Colorado and Texas, and may be exempt from notice-filing in other jurisdictions where we serve our clients.


Site Crafted by HOTFIRE CREATIVE