At this time of year everyone is thinking about taxes!
But what most people don’t understand is, if or how Social Security retirement income is taxed.
But once they get their first tax returns done during retirement they find out. But they are probably also unaware of the next tax-trap that will eventually come.
I lost my Mom in 2013, but the IRS allows a couple to file jointly for that years tax return. In 2014, since my Mom was no longer alive, my Dad only got one monthly Social Security check (keeping his own and losing my Mom’s smaller check).
So in 2014, the “household” income from Social Security dropped by $7,393. But here’s the tax-trap.
Because my Dad was filing as a single person for 2015, the tax rules made more of his Social Security income to become taxable. So even though he got $7,393 LESS in Social Security income, his taxable portion of Social Security grew by almost $1,000!
So not only did he lose some retirement income with the passing of my Mom, his tax bill went up as well!
Although the tax rules of Social Security are too much to go into on this blog, I do give a pretty good explanation of them in my book — as well as some tax advice to actually cut your taxation of Social Security checks (my story of the Early’s, the Waite’s and the Best’s).
It’s worth reading and if you don’t already have a copy you can get one from Amazon here: http://goo.gl/SejKgE
all the best… Mark
PS — Speaking of the IRS, please remember that the IRS will NEVER call you and asking you info, it is NOT the IRS, but a scam. Please don’t fall for these bogus calls. Hang-up!