Understanding Tax Implications on Social Security Benefits

TLDRLearn about the tax implications of receiving social security benefits, including how much of your benefit is taxable and the tax rates applied. Discover how to withhold taxes, the earned income penalty, and state taxes. Make informed decisions on turning on benefits early.

Key insights

🔎Most people have to pay tax on their social security benefits, as it is considered taxable income.

💰The amount of your social security benefit that is taxable depends on your income, with a range from 0% to 85%.

💸Social security benefits are taxed as ordinary income, following ordinary income tax rates.

💡It's important to be aware of the social security earned income penalty if you turn on benefits early and continue to earn income.

🌎State taxes on social security benefits vary, with four states not taxing benefits, 13 partially taxing, and 37 not taxing at all.

Q&A

Do I have to pay tax on my social security benefits?

—Most people have to pay tax on their social security benefits, as it is considered taxable income.

How much of my social security benefits are taxable?

—The amount of your social security benefit that is taxable depends on your income, with a range from 0% to 85%.

What tax rates are applied to social security benefits?

—Social security benefits are taxed as ordinary income, following ordinary income tax rates.

What is the social security earned income penalty?

—The social security earned income penalty is a penalty assessed if you turn on your benefits early and continue to earn income.

Are social security benefits taxed at the state level?

—State taxes on social security benefits vary, with four states not taxing benefits, 13 partially taxing, and 37 not taxing at all.

Timestamped Summary

00:00In this video, Michael Ruger discusses the tax implications of receiving social security benefits.

03:11The amount of your social security benefit that is taxable depends on your income, with a range from 0% to 85%.

04:14Social security benefits are taxed as ordinary income, following ordinary income tax rates.

06:07Be aware of the social security earned income penalty if you turn on benefits early and continue to earn income.

08:56State taxes on social security benefits vary, with four states not taxing benefits, 13 partially taxing, and 37 not taxing at all.

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