How to Pay Fewer Taxes on Social Security

December 18, 2018
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Is Social Security taxable? Sorry, you’re going to get your least favorite answer – it depends.

For most individuals who work, 100% of wages are subject to taxation before deductions.  When you start taking Social Security up to 85% of your benefits is taxable. So the good news is that a lesser percent is subject to taxes. However, it doesn’t stop there. Like wages, Social Security is taxed are your tax rate. However, the percent of Social Security subject to taxes in the first place, varies by income.


If you are married filing jointly, and have income below $32,000*, it’s possible that less than 50% of your benefits are subject to income. For many retirees with good savings, the next logical question might be “How it is possible to have income below $32,000?” Below are a few strategies –


  1. Postpone tax-deferred distributions - If under age 70 ½ you can postpone taking taxable distributions from your IRA if you have other assets to live on (like cash or CD’s).


  1. Avoid Capital Gains – If possible, manage your taxable investments with optimal tax-efficiency, taking losses to offset gains.


  1. Roth conversions – You can bunch Roth conversions in early years and then take distributions from those accounts tax-free during years where you are collecting Social Security.


Disclaimer:   Reston Wealth Management has provided this information as a service and does not provide legal, accounting or tax advice.  The appropriate professionals should be consulted on all legal, accounting and tax matters. Every individual situation is unique and a proper plan should be put in place before making a decision regarding Social Security. The Social Security Administration alone makes all final determinations on your eligibility for benefits and the benefit amounts.  You should consult with your local Social Security Office before acting upon any information provided.

* Citations

  1. “Social Security.” Reports, Facts and Figures | Press Office | Social Security Administration, Social Security Administration, 2017,