How Combined Income Thresholds Can Make Social Security Benefits Taxable Up to 85%

Summary

This article explains how retirees can be surprised by taxes on their Social Security benefits when their "combined income" (adjusted gross income + nontaxable interest + half of Social Security benefits) exceeds certain thresholds. It details the $25,000 and $34,000 combined income thresholds that determine whether 50% or 85% of Social Security benefits become taxable. The article uses the example of a retired schoolteacher with a $32,000 pension who crosses the $34,000 threshold due to IRA withdrawals, causing 85% of her Social Security to be taxed. It offers strategies to manage this tax burden, such as Roth conversions, timing IRA withdrawals, and using qualified charitable distributions.

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