PODCAST: Your Guide to Social Security Taxes: What You Must Know

Your Guide To Social Security Taxes What You Must Know

Written by Jeff Dvorachek

June 27, 2024

Welcome to the Tax Insights Podcast, where we break down complex tax topics into bite-sized how-tos. In this episode, Jeff Dvorachek explores the complex world of Social Security. Join us as he breaks down key dates and essential considerations to help you make informed decisions about your Social Security journey. Let’s dive in!

On today’s episode of Tax Insights, Jeff simplifies the complexities of Social Security. He explores whether Social Security benefits are taxable, breaking down how income levels affect taxation. Jeff also discusses the implications of taking Social Security early, explaining when repayment might be required. Join us as we unravel these key aspects to empower you with the knowledge needed for your Social Security decisions. Let’s dive in!

Host: We’re continuing on social security, but more specifically today, taxes and two parts to today’s topic. First and foremost is social security taxable, when you do actually get it, we talked about those three ages last week, 62, 66, 67, somewhere on there and the age of 70. When you do get social security, Jeff, is that money taxable?

Jeff: I’m going to say for a lot of people, Terry, it will be taxable because if you have low income, the way that the social security taxability tables work is the lower your income, the less social security gets taxable. So if all you’re getting is some interest dividends or maybe all you’re getting is social security, none of it at that point is going to be taxable for the most part. But let’s say that you even have some IRAs or you get some pension or some other income, you know, then part of your social security is definitely going to become taxable. And that scale between where it’s 0% taxable and kind of fully taxable is pretty narrow.

Host: Okay.

Jeff: As a married person, your combined income between you and your spouse, including half of the social security that you actually receive, if that number is over $44,000, then most of your social security is going to be taxable on your return. So you can tell at that point, you know, it doesn’t take much to get to that income.

Host: Absolutely.

Jeff: So, a lot of people will have it taxable.

Host: Now, Jeff, let’s follow up and let’s talk about, you know, what happens if you take social security out earlier, do you need to pay that back? Are there fees, are there taxes on that situation? Because some people do that for various reasons.

Jeff: Right. And when we talk to some of our clients, you know, sometimes those two items get confused, you know, is my social security income taxable is a different conversation than, you know, if I take my social security early, do I have to pay any of it back? So I’m glad that you asked the second question, Terry, because the answer is another one is very possibly you could have to pay some social security income back. If you took the social security before your full retirement age, like you said, Terry, you know, earlier, you know, somewhere between 66 and 67, if you take a between 62 in that age, there’s a good chance that it could have to be paid back. And that really depends on how much earned income that you have.

Host: Sure.

Jeff: It doesn’t matter on interest, dividends, things like that, pensions, but it does matter if you’re still working, whether you’re getting a W-2 income or whether you’re self employed. If you make over a certain amount, and this year, it’s like only $22,300. If you make more than that amount, then you’re right, Terry, some of it has to be paid back.

Host: Yeah. And that’s why I think it’s important to surround yourself with experts in this field, such as Jeff, you and the team at Hawkins Ash because when people are talking about savings, retirement, social security, we need to make sure that your dollars are going to be stretched as far as it can. And we’ll go as far as they can. That’s why connect with the team at Hawkins Ash. How do they do that, Jeff? What’s the best way of reaching out to you guys?

Jeff: I would go right to our website, which is HawkinsAsh.CPA. Go to that CPA-HQ section or just go to any one of our social media sites.

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Jeff Dvorachek
As a partner, I have thorough experience providing tax services to individuals, privately held businesses, nonprofit entities and estates and trusts. I also provide compilation and review services.

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