Social Security is a key income source in retirement, but many people are appalled to find out that their benefits can be subject to tax. How much can you earn before your Social Security benefits will become taxable?
In the following video from our Social Security Q&A series, Dan Caplinger, The Motley Fool's director of investment planning, answers a question from Fool reader Harry, who asks how much income you can have before your Social Security benefits become taxable. Dan goes through the procedure for figuring out the answer to that question, where first you add up all your income from work and investments, including tax-exempt income, and then take one-half of your Social Security benefits and add that to get a final number.
Dan then discusses two thresholds. The first takes place at $25,000 for single filers and $32,000 for joint filers, above which as much as half of your benefits can be taxable. The second is at $34,000 for singles and $44,000 for joint filers and marks the point at which as much as 85% of your benefits can be taxable. Dan goes through the mechanics of the calculation to make it clear that you'll usually have far less of your benefits taxed because the 50% and 85% figures are based on the amount by which your income exceeds the thresholds.
How to get even more income during retirement
Social Security plays a key role in your financial security, but it's not the only way to boost your retirement income. In our brand-new free report, our retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule that can help ensure a more comfortable retirement for you and your family. Click here to get your copy today.
Have general questions about Social Security? Email them to SocialSecurity@fool.com, and they might be the subject of a future video!