Do you pay taxes on Social Security benefits?

We’re now well into 2023, and that means tax filing day (April 18) is fast approaching. If you’re like many Americans, you probably are Preparing to file your return And anxiously waiting for it Tax refund.

Unfortunately, many taxpayers may see smaller refunds this year thanks to that Recent tax changes. If you recently started receiving Social Security benefits, that could also affect your tax burden, not to mention the refund you’re eligible for.

did you accept Social security benefits In 2022? Then there’s the important information you should know about filing your return. You can do your taxes right now – and get the maximum refund – by clicking here.

Who pays taxes on Social Security (and doesn’t)?

Whether you pay federal taxes on Social Security depends on your tax filing status and your “combined income.” This is any tax-free interest you earned throughout the year, plus half of your Social Security benefits and your adjusted gross income.

What does gross income include, exactly?

“Some examples include wages, self-employment income, interest, dividends and other taxable income,” says Daniel Grimes, principal at accounting firm PKF O’Connor Davies.

Once you add up all these numbers, the rest depends on the total and how you file taxes. See the chart below for further guidance:

According to Tax Foundation, there are also 13 states that tax Social Security benefits to some extent Talk to an accountant and see if your state taxes Social Security — and if it does, what that could mean for your tax bill.

You can file your 2022 taxes online today in less than 15 minutes.

What you’ll pay — and how to reduce it

Social Security benefits – at least the portion that is taxable as determined above – are taxed based on your base federal income tax rate. These rates range from 10% to 37%, depending on your filing status and total taxable income.

These tax rates often change annually, but here’s what they look like for tax year 2022:

if you want Reduce your tax burdenYou should monitor your income and try to stay below the minimum threshold listed above.

To begin with, you may want to be aware of the types of retirement accounts you contribute to and receive distributions from. For example, Roth accounts are taxable on funds — not withdrawals, so these can help reduce your taxable income during tax season.

If you take required minimum distributions from your retirement accounts — which most often happens by age 72 — you can consider donating all or a portion of them to charity. This is called the “qualified charitable deduction,” which allows you to exclude those distributions from your income.

If you have investments, there are other options you can explore.

“Look for opportunities to reduce investment income by collecting tax losses to offset investment gains,” says Julia Vanzler, a certified financial planner and personal wealth advisor at SVB Pvt. “Additionally, the $3,000 investment loss per year can be used to offset ordinary income to reduce your adjusted gross income.”

Business owners can also be strategic about their purchasing and invoicing patterns, especially as they approach the end of the year. “If you have a small, cash-based business, you can reduce your income by increasing business expenses in December or delaying invoices for work completed in December,” says Marla Chambers, senior financial planner at Buckingham Advisors.

Explore your tax options and start filing your 2022 return with TurboTax today!

Consult a professional

If you are not sure about Taxes you must pay Regarding your Social Security benefits, consult a tax professional in your area. If they expect your Social Security benefits to significantly increase your tax burden, you may want to consider setting up a withholding from your Social Security check. This will allow you to set aside funds for your taxes and “help spread the tax burden throughout the year,” as Grimes puts it.