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Retirement and Taxes

When you retire you need to keep in mind that you still need enough money to live comfortably for the rest of your days. Social Security is there to help you as you get older but you may be taxed on your benefits. Topping up your finances by earning some extra money on the side with a part-time endeavor or a job helps you to feel more secure as you get older but you need to bear in mind you could incur taxes if you don’t keep an eye on it. Your Social Security benefits could be taxed if 50 percent of your benefits, including all of your other income, is greater than the specific limits for your filing status. 

What are the amounts you have to consider?

These amounts are:

  • If you are a single filer or a qualifying widower and bring in more than $25,000, up to $34,000, you may have to pay taxes on Social Security benefits. As a single filer who has a total income of more than $34,000, you’ll pay taxes on 85 percent of your Social Security benefits!
  • As a married couple filing jointly bringing in between $32,000, and $44,000, you’ll pay taxes on half of your Social Security benefits. A married couple filing jointly with a total income of more than $44,000 will pay taxes on 85 percent of their Social Security benefits.
  • Married couples filing separately that have lived apart for an entire year who bring in more than $25,000, based on the math above, may have to pay taxes on their Social Security benefits.


Folks who retire in certain states need to be aware of their individual state’s tax requirements.

12 states will tax your benefits. Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia all tax you.  

Rafe Klein, Senior Vice President of David Lerner Associates, says “It is important to note ten of these states make allowances for some kind of deduction to minimize your tax burden at a state level. New Mexico is another exception. If you live in the land of enchantment there is no way to minimize the tax burden. Instead, you’ll pay state taxes on all of the Social Security income taxed at a federal level.”

Making sure you know what you have to say and how your extra income will affect your social security benefits is very important because it could mean you are losing money by earning more. 





Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. 

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC

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