Does this fall under… it is always something. This ‘something’ involves social security benefits, taxes, retirement planning and money. One prevalent myth that continues to exist is that social security benefits are not taxable. Well, yes and no and it depends. Which is probably not the solid answer you are seeking.
Who Determines If Social Security Benefits Are Taxable?
That depends on where you live. The Federal government and Internal Revenue Service determine income thresholds which directly impacts the amount of your social security benefits. Benefits can be reduced or increased within specified ranges dependent upon your income, how your income is derived and your filing status.
However where you live also determines a financial impact on your social security benefits. What remains consistent is the tax; what does not remain consistent is how the tax is calculated. If you live in one of the lucky 13 states, this is not new news to you.
The Lucky 13 States Which Tax Social Security Benefits
- New Mexico
- North Dakota
- Rhode Island
- West Virginia
Each state has its’ own formula for calculating the tax on Social Security Benefits. Consult your state’s tax rules as to the parameters of the tax on your income. As always, review I.R.S. publications, consult your tax advisor, your financial planner for professional advice when planning for retirement. I.R.S. provides publication 915 which details the federal rules for taxing benefits.
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