Our Clients have come to us asking why they are paying taxes on their Social Security income when they thought it would be tax-free. It isn’t just those that have built significant wealth that will be paying taxes on some of their Social Security; when your provisional income (your modified adjusted gross income plus 50% of your Social Security benefit, and your spouse’s, if filing jointly) exceeds a mere $34,000 as an individual, or $44,000 as a couple filing jointly, up to 85% of your Social Security benefit could be taxable.
What can you do to offset this reduction in your net income? You may want to consider adding Roth accounts to your savings strategy, or strategically withdrawing from your accounts to avoid creating additional provisional income. Call us, we may know of some savings options you have not yet considered. We’re always here to help.