Truth 22. IRA effects on taxation of Social Security benefits
Tax planning doesn’t end once you are retired. Social Security benefits that you receive may be subject to income tax. Yet, with a bit of planning, you can avoid or reduce the potential tax bite into your Social Security retirement benefits.
Whether you will have to pay income tax on payments that you receive from Social Security depends on your Provisional Income. The concept of Provisional Income is found only in the Internal Revenue Code. It is defined as the amount of your income determined by adding half of your net Social Security benefits and the amounts of some of your tax-exempt sources of income, such as tax-exempt municipal bonds to your taxable income.
Get The Truth About Personal Finance (Collection) now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
