Social Security Taxable Amount

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mountainsoft
Posts: 37
Joined: Sun Jan 22, 2017 8:34 pm

Social Security Taxable Amount

Post by mountainsoft »

I am trying to understand the taxation of social security benefits and the best option for entering the "taxable amount" on the additional inputs screen.

As an example, let's say we get $30,000 from a pension, and $20,000 from social security with no other income. This should put our "combined income" (gross+ half SS) at $40K, and put us in the 32K-44K range to tax 50% of our social security benefits. If I am understanding correctly, the first 32K "base amount" is not taxed, which would leave only 8K to be taxed?

Sooo..... What would I enter as the taxable amount for social security in FRP? Right now I'm entering 50%, but 8K is only 40%?

Or am I completely misunderstanding how SS is taxed?
jimr
Posts: 821
Joined: Thu Feb 28, 2008 6:48 pm

Re: Social Security Taxable Amount

Post by jimr »

It sounds like you understand the gist of how the "taxable percent" parameter works, which is what most people get tripped up on (many think that's the tax rate on the cash flow). Based on what you described, it does sound like a 40% taxable percent would probably be the most appropriate. That said, I'm not a tax expert, so take my comment with the appropriate grain of salt.

Finally, make sure you consider the implications of any RMDs you might have to take starting at age 72 and if/how they might impact ss taxes.
Bigtoeknee
Posts: 3
Joined: Sun Oct 02, 2022 6:32 pm

Re: Social Security Taxable Amount

Post by Bigtoeknee »

Late reply but what I would enter is 20% taxable amount for SS. Since up to 50% of your 8k (32-40k) would equal 4k, and 4k would be 20% of your SS amount. Hope this helps.
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