Millions of seniors depend on Social Security to pay their bills and enjoy the retirement they’ve always dreamed of. But many are also shocked to learn that those benefits are, in fact, taxable in some situations.
But will you have to pay taxes on your benefits? These two questions will give you the answer.
1. What will your annual retirement income amount to?
If Social Security constitutes your only form of retirement income, then there’s a good chance you won’t have to lose some of your benefits to taxes. But the more income sources you have, the greater your likelihood of paying some taxes on your benefits.
Image source: Getty Images.
To see if your benefits will be taxed at the federal level, you’ll need to calculate your provisional income, which is your non-Social Security income (including all tax-free income you collect, such as municipal bond interest, but not including