Depending on your income, you might need to pay income taxes for a portion of your Social Security benefits. Fortunately, you can mitigate and limit these taxes on your Social Security benefits with the help of some useful and efficient tips and strategies.
An important aspect you should always have in mind when trying to minimize the tax hit, is that your provisional income is the one that decides whether or not your Social Security benefits are taxable. This income is calculated by taking your adjusted gross income (AGI), excluding your Social Security benefits, plus the nontaxable interest and half of your Social Security benefits. Depending on the value of your provisional income, either up to 50% or up to 85% of your benefits may be taxable.
For more information on how to calculate your taxable Social Security benefits, see the worksheet in IRS Publication 915, Social Security Benefits.
The secret to minimizing taxes on your Social Security benefits is to maintain your taxable income below a certain level. To successfully achieve that, consider these five strategies.
