Half of America incorrectly believes Social Security benefits are tax-free, leading to confusion about potential taxes which can be significant depending on income levels.
According to the IRS, if you’re single and your combined income with Social Security is between $25,000 and $34,000, up to 50% may be taxable. This can rise to 85% for incomes over $34,000.
To minimize taxes on Social Security benefits, delaying receipt of payments until age 70 can yield an 8% increase annually, and taxes can be avoided on unreceived funds.
For married couples filing jointly, if the combined income exceeds $44,000, they may face taxes on up to 85% of their Social Security benefits, illustrating the need for careful income planning.
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