Withdrawal More Money to Cover Inflation? Beware of This Community Safety Risk | Personal Finance

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Withdrawal More Money to Cover Inflation?  Beware of This Community Safety Risk |  Personal Finance

When you’re talking about federal taxes, only some income counts. The Social Security Administration looks at “provisional” income, which is half your Social Security checks, all taxable income, and some nontaxable income. If your provisional income exceeds certain limits, here are the tax rules you face:

The thresholds at which benefits become partly taxed aren’t subject to adjustment each year as a result of wage growth and inflation. That means while you may need to increase income to maintain buying power this year, the IRS won’t take that into account when deciding whether your benefits will be taxed.

Story Highlights

  • The big question to ask yourself when your household income goes up is, exactly when do your Social Security benefits become subject to taxation?

  • Single tax filers with a provisional income between $25,000 and $34,000 will owe taxes on up to 50% of benefits.Single tax filers with a provisional income above $34,000 will owe taxes on up to 85% of benefits.Married joint filers with an income between $32,000 and $44,000 will owe taxes on up to 50% of benefits.Married joint filers with an income above $44,000 will owe taxes on up to 85% of benefits.