If you haven’t filed your taxes yet, you could avoid paying taxes on your Social Security benefit.
However, it may take a little finessing.
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How do I avoid my benefit being taxed?
In order to have your Social Security benefit tax-free, your combined annual income must be under $25,000 for people filing single. For married couples filing jointly, the limit is $32,000 a year. Read more about it here.
Combined income consists of three parts:
- your adjusted gross income, not including Social Security
- tax-exempt interest
- 50% of your Social Security income
If you are under the threshold for your status after adding up those amounts, you will no pay federal taxes on your benefit.
However, if you are above the threshold, you still might not have to pay taxes on your full benefit. You may only have to pay taxes on 50% or 85%.
For individual filers:
- income between $25,000 and $34,000: 50% taxable
- more than $34,000: 85% taxable
For joint filers:
- combined income between $32,000 and $44,000: 50% taxable
- More than $44,000: 85% taxable
If your Social Security benefit is mostly fixed, you have two main options for getting into the tax free zone:
- tax exempt interest
- adjusted gross income
You can adjust your adjusted gross income in a variety of ways. Teachers can deduct unreimbursed classroom supplies, or self-employed can deduct insurance premiums. And anybody can deduct charitable donations.
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