In the Video above, Scott Farnsworth, Central Florida's Tax-Free Retirement Expert answers a frequently asked question: How can I avoid paying taxes on my Social Security benefits?
"Avoiding taxes on Social Security requires some advance planning because the rules are a little bit strange. There's something called "provisional income." Provisional income basically means all your income in retirement, such as pensions, distributions from IRAs and 401(k)s, including so-called tax-free bonds. The interest on those is counted. If you have a little side job, that gets counted too. All of those go into the mix of what's called "provisional income."
What isn't included in that mix is distributions from TRAs, Tax-free Retirement Accounts, and from Roth IRAs. If you have provisional income, which you will, we see how much is that. There are certain categories. If as a married couple you're under $32,000 or as a single person if you're under $25,000 in provisional income your Social Security is tax-free. If it's between $32,000 and $44,000 as a married couple or 25 and $34,000 as a single then you pay tax on 50% of your Social Security benefits. If it's above those limits, 34 for a couple, 44 for a single, you pay tax on 85% of your Social Security benefits."
How can I avoid paying taxes on my Social Security benefits?