Reduce Or Eliminate Tax On Your Social Security Benefits

~ By Rick Kelly, CSA ~

Many retirees today are paying taxes on their Social Security Benefits!

Because most retirees live on fixed incomes, this expense has a really negative impact on the quality of lifestyle!

In 1984, the IRS passed legislation that made up to 50% of Social Security Benefits taxable. Single tax return filers that have income between $25,000 – $34,000 and joint tax return filers that have income between $32,000 – $44,000 are included.

In 1993, the IRS passed additional legislation making up to 85% of Social Security Benefits taxable. This legislation affects single tax return filers that have income exceeding $34,000 and joint tax return filers that have income exceeding $44,000.

To calculate the taxable amount of Social Security Benefits, three categories of income are included:

  1. All income from pensions, wages, interest, dividends, capital gains, rents, royalties, etc.
  2. All interest from tax-free investments.
  3. 50% of the actual Social Security Benefits.

When the three categories added together exceed the thresholds, Social Security Benefits become taxable.

For example, assume a single tax return filer has the following assets and annual income:newsTable110115
The total income adds up to $33,400 which exceeds the $25,000 threshold. Using the IRS Formula, $4,200 of the Social Security Benefits are taxable.

However, the good news is that there are strategies where retirees can reposition some of their savings from taxable and tax-free investments into tax-deferred savings and pay little or no tax on their Social Security Benefits.

For example, if $365,000 was repositioned into tax-deferred savings at 3%, the taxes on Social Security Benefits would be eliminated, but still earn interest of $10,950!

If you are paying taxes on your Social Security Benefits, review your sources of income. Frequently, the earnings from bank, investment and tax-free savings are the reason and a simple reposition of assets into tax deferred savings can fix your tax problem!

Rick Kelly

Rick Kelly

Rick Kelly is a Certified Senior Advisor with Futurity First-Summit Financial Group in CO. He helps retirees to secure their retirements. To request A FREE “Social Security Worksheet” call his toll-free 24-hour resource line right now at 1-877-596-8233 or email him at


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