Social Security Taxation
How to Potentially Reduce
the Tax on Your Social Security Income
Since 1983, up to 50% of your Social Security Benefits can be taxed. In 1993, tax laws were passed that increased that percentage from 50% to 85% if provisional income exceeds certain amounts.
I.R.C. Sec. 86 et seq. (2002).
What Is Included in Provisional income?
Income from all sources EXCEPT a deferred annuity. Interest from a deferred annuity is EXCLUDED from provisional income. *
*Deferred annuities accumulate tax-deferred interest that is not included as Provisional Income. Below is a chart comparing deferred annuities against other income sources.
|Income from Mortgages||R|
|US Treasury Bill||R|
|Certificates of Deposit||R|
|Money Markey Accounts||R|
|Credit Union Savings||R|
|Dividends - Stocks/Mutual Funds||R|
|Annuity - Withdrawals||R|
|Tax Exempt Interest||R|
|½ Social Security||R|
|Social Security Taxed||$10,200|
|Income Tax on Social Security||$2,661|
|Income Tax on Remaining Income||$3,776|
|TOTAL FEDERAL TAX||$6,437*|
*Tax amounts are based on 2002 Federal tax tables for a single person age 65 and over with no dependents and taxable income of $37,350.
|Social Security Taxed||$0|
|Income Tax on Social Security||$0|
|Income Tax on Remaining Income||$1,076|
|TOTAL FEDERAL TAX||$1,076**|
**Tax amounts are based on 2002 Federal tax tables for a single person age 65 and over with no dependents and taxable income of $9,150.
You save $5,361 per year in SPENDABLE INCOME!
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