--- title: How Are Social Security Benefits Taxed? description: Learn the ins and outs of Social Security benefit taxation to plan for the future and enjoy your retirement. image: https://blog.cmp.cpa/hubfs/How%20Are%20Social%20Security%20Benefits%20Taxed%20-%201-1.jpg --- - [Contact Us](https://cmp.cpa/contact-us/) - [Bill Pay](https://cmp.cpa/my-account/) - [File Drop-Off](https://app2.gettruss.io/firm_drop_offs/new?auth_token=MTQyNyZ6OW1HeHh4NWhRbXNIRDF6RmU3OVZXRGJRUkV2aU5ZSGN0OXprNUtH&firm_user_id=3261) - [Client Portal](https://app2.gettruss.io/client_portals/sign_in?client_portal_name=CMP-CPA) [![CMP](https://blog.cmp.cpa/hubfs/Cookmartin-Dec2015/CMP-Logo.png "Cook Martin Poulson, P.C.")](https://cmp.cpa/) - [Home](https://cmp.cpa/) - [About](https://cmp.cpa/company/) - [Meet the Team](https://cmp.cpa/company/meet-the-team/) - [Community](https://cmp.cpa/company/community/) - [CMP Celebrates 40-Years In Business](https://cmp.cpa/company/news/) - [Careers](https://cmp.cpa/company/careers/) - [Reviews & Testimonials](https://cmp.cpa/reviews/) - [Services](https://cmp.cpa/services/) - [Tax Preparation](https://cmp.cpa/services/income-tax-services/) - [Financial Audits & Reviews](https://cmp.cpa/services/financial-statements-audits-and-reviews/) - [Business Valuation](https://cmp.cpa/services/business-valuations/) - [Estate and Succession Planning](https://cmp.cpa/services/estate-succession-planning/) - [ERISA / 401K Audits](https://cmp.cpa/services/erisa-audits/) - [Crypto Tax Accountant](https://cmp.cpa/services/crypto-tax/) - [Federal R&D Tax Credit](https://cmp.cpa/services/rd-tax-credit-services/) - [Utah R&D Tax Credit](https://cmp.cpa/services/utah-rd-tax-credit-services/) - [Bookkeeping and Payroll](https://cmp.cpa/services/bookkeeping-and-payroll-services/) - [Accounting Software Solutions & Consulting](https://cmp.cpa/services/accounting-software-solutions/) - [Retirement Plan Services and TPA](https://cmp.cpa/services/retirement-plan-tpa-services/) - [Cost Segragation Studies](https://cmp.cpa/services/cost-segregation/) - [Outsourced CFO](https://cmp.cpa/services/cfo-outsourced-solutions/) - [Industries](https://cmp.cpa/industries/) - [Farm and Ranch](https://cmp.cpa/industries/farm-ranch-accountant-service/) - [Real Estate and Construction](https://cmp.cpa/industries/real-estate-construction/) - [Retail and Wholesale](https://cmp.cpa/industries/wholesale-and-retail-accounting-services/) - [Nonprofit](https://cmp.cpa/industries/non-profits/) - [Manufacturing](https://cmp.cpa/industries/manufacturing/) - [Healthcare](https://cmp.cpa/industries/healthcare/) - [Technology](https://cmp.cpa/industries/software-technology/) - [Internet Marketing/YouTube](https://cmp.cpa/industries/internet-marketing-youtube/) - [Resources](https://cmp.cpa/resources/) - [Videos](https://cmp.cpa/videos/) - [Tools](https://cmp.cpa/resources/#tools) - [Important Documents](https://cmp.cpa/resources/#import-doc) - [Important Links](https://cmp.cpa/resources/#import-link) - [FAQ](https://cmp.cpa/resources/faqs/) - [Problems We Solve](https://cmp.cpa/problems-we-solve/) - [Blog](https://blog.cmp.cpa/)   Wasatch Front  [801-467-4450](tel:8014674450) |  Cache Valley [435-750-5566](tel:4357505566)[tel:8017428119](tel:8017428119) | Southern Utah  [435-269-4540](tel:4352694540) ![Salt-Lake-City-Utah.jpg](https://blog.cmp.cpa/hs-fs/hubfs/Cookmartin-Dec2015/Salt-Lake-City-Utah.jpg?width=1106&name=Salt-Lake-City-Utah.jpg "Salt-Lake-City-Utah.jpg") # How Are Social Security Benefits Taxed? December 17, 2019 By [Richard K. Poulson](https://blog.cmp.cpa/author/richard-k-poulson) *This article was first published June 20, 2016. It was extensively updated on December 17, 2019* Most of us dream of retiring one day, but unless you’re lucky enough to be independently wealthy, you’ll probably need to rely on your Social Security benefits to be able to stop working. At CMP, we know that retirement is a big issue for many of our clients. In fact, one of the most common questions we hear is this one: ## *How are Social Security benefits taxed?* ![How Are Social Security Benefits Taxed - 1](https://blog.cmp.cpa/hs-fs/hubfs/How%20Are%20Social%20Security%20Benefits%20Taxed%20-%201.jpg?width=781&name=How%20Are%20Social%20Security%20Benefits%20Taxed%20-%201.jpg) That’s an essential question to ask. Understanding how Social Security benefits are taxed is crucial for anybody who wants to plan for retirement. The information changes based on your retirement age and your outside income, including self-employment income and taxable interest. As you might expect, it’s a complex issue that can be confusing. With that in mind, we’ve put together this overview of how Social Security benefits are taxed, including information about how your age affects your benefits and when you can start collecting your Social Security benefits. Here’s what you need to know. ## **What is Full Retirement Age?** [Full Retirement Age](https://www.ssa.gov/planners/retire/retirechart.html) is the age at which you are eligible to collect your full Social Security benefits. The laws have changed in recent years and your FRA may vary depending on when you were born. Here’s how it works: | **Year of Birth** | **FRA** | | --- | --- | | Before 1937 | 65 | | 1938-1942 | Add 2 months for each year after 1937 | | 1943-1954 | 66 | | 1955 | 66 & 2 mos. | | 1956 | 66 & 4 mos. | | 1957 | 66 & 6 mos. | | 1958 | 66 & 8 mos. | | 1959 | 66 & 10 mos. | | 1960 | 67 | Waiting until full retirement age to start collecting Social Security is the only way to ensure that you collect the full benefits you’ve earned. Collecting early will reduce your benefits, as we’ll discuss in the next section. ## **When Can You Start Receiving Social Security Benefits?** The earliest age at which you’re eligible to begin Social Security retirement is 62, regardless of the year you were born (though there are exceptions for total disability). If you begin to collect Social Security before you’ve reached your FRA, then you’ll receive reduced benefits, as follows: | **Age** | **Percentage of Benefits (Earner)** | **Percentage of Benefits (Spouse)** | | --- | --- | --- | | 62 | 75% (70% for people born after 1959) | 35% | | 65 | 93.3% | 45.8% | | FRA/67 | No Reduction | 50% | You may [defer collecting Social Security](https://www.ssa.gov/planners/retire/applying1.html) until you reach the age of 70, and if you do, you can expect to receive a monthly increase based on the number of months over FRA you didn’t collect benefits. However, you should be aware that you will only receive back payments for six months if you choose this option. Some people choose to wait to collect Social Security benefits because they want the increased monthly benefit. However, since the amount in question is usually rather small, you should base your decision on your overall financial health and retirement plans, not on the promise of increased benefits alone. [![Download Now: 7 Tips for Reducing Your Tax Liabilities](https://hubspot-no-cache-na2-prod.s3.amazonaws.com/cta/default/1853761/7e6e14c3-3aee-4283-a149-9c3fdee27af8.png)](https://hubspot-cta-redirect-na2-prod.s3.amazonaws.com/cta/redirect/1853761/7e6e14c3-3aee-4283-a149-9c3fdee27af8) ## **How Much Can I Work &  Still Receive Social Security Benefits?** You may choose to continue working and still earn [Social Security benefits](https://www.ssa.gov/planners/retire/whileworking.html), but there is a reduction in benefits if you earn over the limits set by the Social Security Administration. For 2019, those limits are: - $17,640 if you are under full retirement age for the entire year - $46,930 in the year you reach full retirement age For the first option, your Social Security benefits will be reduced by $1 for every $2 you earn over the limit. For the second option, your benefits will be reduced by $1 for every $3 over the limit, but this number counts only the months before you reached FRA. You should also keep in mind that your income may be taxable even after you reach FRA if you earn more than the limits laid out by the Social Security Administration. If you choose to work, you will need to be aware of the limits and tax rules so you don’t end up owing taxes. ## **Are Social Security Benefits Taxed After Age 66?** A lot of taxpayers are **mistakenly under the impression that their Social Security benefits aren’t taxed once they reach Full Retirement Age**. This comes from confusing the fact that their Social Security benefits will no longer be reduced after Full Retirement Age, with the taxation of the Social Security benefits. If you don’t have income other than your Social Security benefits, your benefits won’t be taxed. However, if you do have other income—or if your Social Security payments exceed certain limits—then you’ll be [required to pay taxes](https://www.ssa.gov/planners/taxes.html) as follows: AGI = Federal Adjusted Gross Income (can be found on the bottom of page 1 of your personal tax return, Form 1040) | Filing Status | Combined Income | Taxable Portion | | --- | --- | --- | | Single | $25,000 - $34,000 | Up to 50% | | over $34,000 | Up to 85% | | | Married Filing Jointly | $32,000 - $44,000 | Up to 50% | | over $44,000 | Up to 85% | | | Adjusted Gross Income (AGI) \+ Nontaxable Interest \+ 1/2 of Social Security Benefits \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Combined Income | | --- | For a married couple, the Social Security benefits begin to be included in taxable income/Adjusted Gross Income (AGI) once the combined income reaches $32,000.  As shown above, the calculation of combined income includes one-half of the Social Security benefits.  Unfortunately, the thresholds in the table above don’t get adjusted for inflation and have been the same for decades. You're not alone. It's a difficult situation that many businesses are experiencing as well. Check out our blog post: [How Small Businesses Can Cope with the Impact of Inflation (9 Expert-Backed Strategies)](https://blog.cmp.cpa/small-business-protect-against-inflation) for tips on how to help your small business stay afloat and even thrive under the current economic conditions. It is worth noting that married people who file separate tax returns will almost certainly end up paying a Social Security tax. If you’ve been filing separately and are planning to retire, you may want to consider filing a joint return from now on. The actual tax payable on the Social Security benefits will depend on the taxpayer’s AGI, as well as the available deductions, exemptions, and income tax bracket.  Up to 85% of the Social Security benefits may be included in a taxpayer’s taxable income. ## **Conclusion** Deciding to retire requires a careful assessment of your Social Security benefits as well as an understanding of the tax implications of retirement. While the information in this article provides an overview, it is not comprehensive. It’s always a good idea to consult with an accountant or tax professional if you have questions about Social Security tax. Are you preparing to retire? Learn how CMP can help you [save on your taxes](https://cmp.cpa/services/income-tax-services/). Talk to us Get a clear answer for your situation CMP works with individuals and business owners nationwide on proactive tax planning, not just filing. [Talk to a CPA About Your Situation](https://info.cmp.cpa/nationwide-tax-consultation?utm_source=blog&utm_medium=inline_cta&utm_campaign=taxation-and-social-security-benefits&utm_content=nationwide-tax-consultation-end)     *This content is for educational purposes only and may not apply to your specific tax situation. Tax laws are complex, subject to change, and depend on individual circumstances. Consult a qualified tax advisor before relying on this information.* [![Richard K. Poulson](https://blog.cmp.cpa/hs-fs/hubfs/Blog_Author/richard-poulson.jpg?width=160&height=190&name=richard-poulson.jpg)](https://cmp.cpa/team/richard-k-poulson/) About Richard K. Poulson Rich is the kind of man everyone likes to have around. He is totally committed to whatever he is doing, whether it is working on a client’s estate plan, business valuations, or vacationing with his family. His goal is to help you add value to your business. You can feel comfortable with the outcome of any project if Rich is involved. You know he will be honest, give the project the time it deserves, and you’ll always get the best he has to offer. 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Trusted By: Trusted By: - ![](https://cmp.cpa/wp-content/uploads/Fisher-1.png) - ![](https://cmp.cpa/wp-content/uploads/kaddas-1.png) - ![](https://cmp.cpa/wp-content/uploads/Renegade.png) - ![](https://cmp.cpa/wp-content/uploads/cvm.png) - ![](https://cmp.cpa/wp-content/uploads/evolution.png) - ![](https://cmp.cpa/wp-content/uploads/Baicor.png) - ![](https://cmp.cpa/wp-content/uploads/Cliffside.png) - ![](https://cmp.cpa/wp-content/uploads/Vista-Healthcare.png) - ![](https://cmp.cpa/wp-content/uploads/Spartan-Logo.png) - ![](https://cmp.cpa/wp-content/uploads/SWSP-Southwest-Spine.png) - ![](https://blog.cmp.cpa/hubfs/Trusted%20By%20Logo/Rancho-Markets%201.png) - ![](https://blog.cmp.cpa/hubfs/Trusted%20By%20Logo/Highmark-Consturction-Logo.png) - ![](https://blog.cmp.cpa/hubfs/Trusted%20By%20Logo/Chanshare-Farms-Logo.png) - ![](https://blog.cmp.cpa/hubfs/Trusted%20By%20Logo/Mebie%20Baby%201.png) ![](https://cmp.cpa/wp-content/uploads/Fisher-1.png) ![](https://cmp.cpa/wp-content/uploads/kaddas-1.png) ![](https://cmp.cpa/wp-content/uploads/Renegade.png) ![](https://cmp.cpa/wp-content/uploads/cvm.png) ![](https://cmp.cpa/wp-content/uploads/evolution.png) ![](https://cmp.cpa/wp-content/uploads/Baicor.png) ![](https://cmp.cpa/wp-content/uploads/Cliffside.png) ![](https://cmp.cpa/wp-content/uploads/Vista-Healthcare.png) ![](https://cmp.cpa/wp-content/uploads/Spartan-Logo.png) ![](https://cmp.cpa/wp-content/uploads/SWSP-Southwest-Spine.png) ![](https://blog.cmp.cpa/hubfs/Trusted%20By%20Logo/Rancho-Markets%201.png) ![](https://blog.cmp.cpa/hubfs/Trusted%20By%20Logo/Highmark-Consturction-Logo.png) ![](https://blog.cmp.cpa/hubfs/Trusted%20By%20Logo/Chanshare-Farms-Logo.png) ![](https://blog.cmp.cpa/hubfs/Trusted%20By%20Logo/Mebie%20Baby%201.png) ![](https://cmp.cpa/wp-content/uploads/Fisher-1.png) ![](https://cmp.cpa/wp-content/uploads/kaddas-1.png) ![](https://cmp.cpa/wp-content/uploads/Renegade.png) ![](https://cmp.cpa/wp-content/uploads/cvm.png) ![](https://cmp.cpa/wp-content/uploads/evolution.png) ![](https://cmp.cpa/wp-content/uploads/Baicor.png) ![](https://cmp.cpa/wp-content/uploads/Cliffside.png) ![](https://cmp.cpa/wp-content/uploads/Vista-Healthcare.png) ![](https://cmp.cpa/wp-content/uploads/Spartan-Logo.png) ![](https://cmp.cpa/wp-content/uploads/SWSP-Southwest-Spine.png) ![](https://blog.cmp.cpa/hubfs/Trusted%20By%20Logo/Rancho-Markets%201.png) ![](https://blog.cmp.cpa/hubfs/Trusted%20By%20Logo/Highmark-Consturction-Logo.png) ![](https://blog.cmp.cpa/hubfs/Trusted%20By%20Logo/Chanshare-Farms-Logo.png) ![](https://blog.cmp.cpa/hubfs/Trusted%20By%20Logo/Mebie%20Baby%201.png) ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Richard Poulson", "url" : "https://blog.cmp.cpa/author/richard-poulson" }, "dateModified" : "2019-12-17", "datePublished" : "2019-12-17", "description" : "Understanding how Social Security benefits are taxed is essential for retirement planning. This article explains full retirement age, when you can begin receiving benefits, how working affects benefits, and when Social Security benefits may be taxed.", "hasPart" : [ { "@id" : "https://blog.cmp.cpa/taxation-and-social-security-benefits#faq" } ], "headline" : "How Are Social Security Benefits Taxed?", "image" : { "@type" : "ImageObject", "height" : 1000, "url" : "https://blog.cmp.cpa/hs-fs/hubfs/How%20Are%20Social%20Security%20Benefits%20Taxed%20-%201.jpg?width=2000&height=1000&name=How+Are+Social+Security+Benefits+Taxed+-+1.jpg", "width" : 2000 }, "inLanguage" : "en", "mainEntityOfPage" : { "@id" : "https://blog.cmp.cpa/taxation-and-social-security-benefits", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "height" : 86, "url" : "https://cmp.cpa/wp-content/uploads/CMP-Logo.png", "width" : 406 }, "name" : "CMP" } } ``` ```json { "@context" : "https://schema.org", "@id" : "https://blog.cmp.cpa/taxation-and-social-security-benefits#faq", "@type" : "FAQPage", "mainEntity" : [ { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "Social Security benefits may be taxable depending on your combined income (Adjusted Gross Income + nontaxable interest + one-half of Social Security benefits). If you have no income other than Social Security, benefits generally aren’t taxed, but if combined income exceeds certain thresholds, up to 50% or 85% of benefits may be taxable." }, "name" : "How are Social Security benefits taxed?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "Full Retirement Age (FRA) is the age when you are eligible to receive your full Social Security retirement benefit. FRA depends on your year of birth, and waiting until FRA avoids reductions that apply when benefits are claimed early." }, "name" : "What is Full Retirement Age?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "You can begin receiving Social Security retirement benefits as early as age 62, but benefits are reduced if you start before your Full Retirement Age. You can also delay benefits up to age 70 to receive an increased monthly benefit." }, "name" : "When Can You Start Receiving Social Security Benefits?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "You can work while receiving Social Security, but if you are under Full Retirement Age and earn above annual limits, your benefits may be temporarily reduced. In the year you reach FRA, a higher limit applies and reductions generally apply only to months before you reach FRA." }, "name" : "How Much Can I Work & Still Receive Social Security Benefits?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "Yes, they can be. While benefit reductions related to work generally stop after Full Retirement Age, the taxation of Social Security benefits depends on combined income. If combined income exceeds IRS thresholds, benefits may still be taxable even after age 66." }, "name" : "Are Social Security Benefits Taxed After Age 66?" } ] } ```