Social Security serves as a critical source of income for millions of retired seniors. But many recipients are shocked to learn that their benefits are subject to taxes, thereby leaving them with less money to pay the bills.

The good news? A couple of strategic moves on your part could help you get out of paying taxes on your Social Security income. Here's how to pull that off.

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1. House your retirement savings in a Roth IRA

To see if you're liable for taxes on your Social Security benefits, you'll need to calculate what's known as your provisional income. You can arrive at that figure by adding up your non-Social Security income (including tax-free income you might be entitled to, like interest from municipal bonds) plus 50% of what you receive from Social Security on an annual basis.

You may be taxed on up to 50% of your benefits if your provisional income equals:

  • $25,000 to $34,000, and you're a single tax filer.
  • $32,000 to $44,000, and you're a couple filing jointly.

But wait -- it gets a bit worse. You may be subject to taxes on up to 85% of your benefits if your provisional income exceeds $34,000 as a single tax filer, or $44,000 as a couple filing jointly. As such, it's often the case that seniors who have income outside of Social Security ultimately wind up being taxed on their benefits to some degree.

A good way to avoid that scenario, however, is to house your retirement savings in a Roth IRA. With a regular IRA, your withdrawals during retirement are taxed and count toward your provisional income. Roth IRA withdrawals, on the other hand, are not taxed and are not counted toward provisional income, which means you may be able to avoid paying taxes on your benefits if you choose the right savings vehicle.

2. Move to a state that doesn't tax benefits

Your provisional income will determine whether you pay taxes on your Social Security benefits at the federal level. But the state you retire to will dictate whether your benefits are subject to taxes at the state level.

There are 13 states that tax Social Security to different degrees:

  • Colorado
  • Connecticut
  • Kansas
  • Minnesota
  • Missouri
  • Montana
  • Nebraska
  • New Mexico
  • North Dakota
  • Rhode Island
  • Utah
  • Vermont
  • West Virginia

Most of these states, however, offer an exemption for low or even moderate earners, so even if you retire in one of them, you may manage to avoid paying taxes on your Social Security income. However, Minnesota, North Dakota, Vermont, and West Virginia don't offer an exemption. Of course, some of the states on this list offer a relatively affordable lifestyle for seniors, so even if your retirement income is such that you won't qualify for an exemption on Social Security taxes, it could still pay to make one of these states your home.

Prepare for taxes in retirement

Your Social Security benefits may not be your only source of taxable income in retirement. Read up on the ways seniors are taxed, and be strategic in lowering that burden. A little advanced planning on your part could help you avoid a world of financial stress later in life.