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No respite from tax on Social Security benefits after age 66

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. If I delay receiving Social Security benefits until age 66, will I avoid the tax on the benefits? L.T., Hanover, Pa.  

A. It’s not so simple. If you wait until you’re entitled to receive full Social Security retirement benefits at age 66, we’ll assume you were born between 1943 and 1954, you still may have to pay tax on the benefits in the year they are received. The tax liability for each year is based on a two-tier system for “provisional income” exceeding $32,000 and $44,000 ($25,000 and $34,000 for single filers).

For more details on the issue, visit the Social Security Administration (SSA) website at www.ssa.gov/planners/taxes.htm.

Tip: The two tax thresholds for taxing Social Security benefits are not indexed for inflation.

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