Financial Planning for the Middle Class Investor

Retirees, beware of double taxation on retirement plan distributions

“Use due care with income tax estimates when social security is included!”

There are two distinct considerations for taxpayers who receive social security benefits. The first is the potential of repaying social security benefits when wages are earned. The second is the potential of paying income taxes on your social security benefits. This article’s focus is regarding the income tax liability related to social security.

Social security benefits are exempt from income taxes if there is no other income to report. However, benefits are means tested by a complicated calculation called “the provisional income test.” This test is used to determine the portion of social security that is added to the taxable income...

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