Social Security Benefits
Social Security is an important source of income in retirement for more than 64 million Americans, if not the main one. Around 80 percent of these people are retirees who collect the retirement income they are entitled to after 40 or 50 years of hard work.
In certain cases, it’s possible to dodge taxes on Social Security benefits. For instance, if your combined income does not exceed a certain threshold, Uncle Sam cannot touch your Social Security retirement benefits.
According to the IRS, the combined income consists of your adjusted gross income, plus nontaxable interest, plus half of your Social Security benefits per year.
The threshold is updated annually so that people know what category they are in. For example, in 2020, Social Security benefits have been tax-free if the combined income was not higher than $25,000 for a single tax filer or $34,000 for a couple filing jointly.
Social Security benefits are also taxable in various states, therefore, if you want to live your golden years in a place where your Social Security income is left untouched by the state or federal government, check out these 26 States That Do Not Tax Your Social Security Benefits.
