Truth Tip, Social Security Taxes
Do you know how much of your Social Security can be taxed? Up to 85% of Social Security Benefits can be subject to income tax, though it can be confusing to understand exactly how to calculate. First, your Modified Adjusted Gross Income (MAGI) must be calculated, which determines the amount of income affecting tax on Social Security income. The calculations for your MAGI do not get to use personal or Standard Deductions to reduce the amount, nor does the Standard Deduction work against Social Security income. In conclusion, the SS Tax Basis automatically calculates the fact that you do not get to take advantage of the Standard Deduction when calculating how much of your Social Security income is exposed to tax. You also cannot use the Standard Deduction to offset any of the Social Security income tax due. So, you could literally pay no tax on additional income (because it was offset by personal and Standard Deductions) and still pay tax on Social Security income.