Q. I’m age 65 and still working. If I apply for Social Security benefits, will they be taxable? J.M., Lansing, MI
A. Probably, but it depends on whether your “provisional income” (PI) exceeds certain thresholds. For this purpose, PI is the total of
(1) your adjusted gross income (AGI),
(2) your tax-exempt interest income (e.g., from municipal bonds) and
(3) one-half of the Social Security benefits received. The IRS uses a two-tier tax system, but liability under the first tier is triggered for a PI above the relatively low thresholds of $25,000 for single filers and $32,000 for joint filers.
Tip: Don’t confuse these rules with the “earnings test” for Social Security benefits.
- Small Business Tax Deduction Strategies No matches