Brendan Willmann, CPA, EA, CFP®
Asheville: 828-348-8698
Cincinnati: 513-549-2736

Is Social Security Taxable?

Social Security benefits are tax-free for some and partially taxed for others.

To determine the taxation of your benefit it is important to understand a concept called “provisional income.”  Provisional income is a fairly complex calculation involving half of your Social Security income, other income (including tax-free interest) along with a few adjustments.  Provisional income is further complicated when filers also make Traditional IRA contributions.

Individuals receiving a Social Security benefit are encouraged to run a tax projection in advance to help determine their provisional income and thus how much of their benefit may be subject to taxes.  Doing so helps to determine an optimal distribution strategy from other savings.  Failing to consider the tax consequences of other transactions or distributions may cause your Social Security benefit to be taxed unnecessarily.  Unfortunately this has a compounding effect as taxable Social Security benefits can increase the tax levied on other forms of income.  Consult a qualified tax advisor willing to take the time to determine the most tax-efficient strategy.


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