You've spent years in the workforce, diligently paying into the Social Security program. Unfortunately, though, that doesn't exempt you from potentially paying taxes on your benefits in retirement.

For millions of retirees, Social Security benefits are a crucial source of income that can make the difference between a financially secure retirement and a difficult one. If taxes take a chunk of your monthly checks, it can be more difficult to make ends meet.

However, if you're strategic, there are a couple of ways to avoid paying taxes on your Social Security benefits in retirement.

Smiling senior couple sitting on a boat.

Image source: Getty Images.

1. Contribute more to a Roth IRA

A Roth IRA is a powerful investing tool, and for good reason. For one, it will help you avoid paying taxes on your retirement account withdrawals because your money is taxed up front -- meaning your withdrawals are tax free. But it can also help reduce or even eliminate federal taxes on Social Security benefits.

When determining whether you'll owe federal taxes on your benefits, the Social Security Administration considers your "combined income," which is half your annual benefit amount plus your adjustable gross income and nontaxable interest.

Percentage of Your Benefits That Will Be Taxed Annual Combined Income for Individuals Annual Combined Income for Married Couples Filing Jointly
0% Less than $25,000 Less than $32,000
Up to 50% $25,000 to $34,000 $32,000 to $44,000
Up to 85% More than $34,000 More than $44,000

Because these income limits are so low, many retirees will end up paying federal taxes on at least a portion of their benefits. Here's the good news, though: Roth IRA withdrawals don't count toward your combined income.

This means the more of your retirement income that comes from your Roth IRA, the more you can reduce your combined income. Depending on how much you're collecting in benefits, how much you're withdrawing from other retirement accounts such as a 401(k) or traditional IRA, and how much you're receiving from additional income sources such as a pension, you might be able to lower your combined income enough to eliminate federal taxes on your benefits.

2. Consider relocating to a state that doesn't tax benefits

Federal taxes are only one side of the equation, and you could face state taxes on your benefits as well. The majority of states do not tax Social Security benefits, so there's a good chance you're already off the hook. However, a handful of states still tax benefits to some degree.

Utah and Nebraska follow the federal tax guidelines, using your combined income to determine how much you'll pay in taxes. Montana, New Mexico, and West Virginia also tax benefits, but they have certain modifications. For example, in West Virginia, state taxes on benefits are being phased out, so retirees can expect to pay less in taxes each year until 2022, when benefits will be exempt from taxes.

Many other states exclude Social Security benefits from taxation based on factors like age or income level, so you might be able to get out of paying taxes depending on how much you're withdrawing from your retirement accounts.

Keep in mind, though, that Social Security taxes are only one factor to consider if you're thinking about moving. Some states might not tax benefits but have exorbitant property taxes, for instance. Or you could get a tax break but reside in a state where the general cost of living is far higher than average. So before you start packing your bags, make sure you've considered the big picture.

How taxes factor into your retirement plan

You might already face taxes on your retirement account withdrawals, and Uncle Sam could take a bite out of your Social Security benefits as well. But if you're strategic about how you save for retirement as well as what state you call home in your senior years, you just might be able to avoid taxes entirely and keep more of your hard-earned money.