Q&A: Taxes and Social Security

Dear Liz: You wrote in a column about retirement plan distributions and the effect that those have on taxation of one’s Social Security benefits. Your example was if someone made over $44,000 in combined earnings then their benefits would be taxed at 85%. Does this apply if one waits until full retirement age to start drawing Social Security? My husband also will be required to start making required minimum distributions in 2023. Are those distributions taxed differently from the rest of our income, since we are both still working? Or does it matter whether we are working or not?

Answer: The taxation of Social Security is complicated and often misunderstood, but rest reassured that you won’t lose 85% of your benefits. If you have income in addition to Social Security — whether it’s from work, retirement plan distributions or other sources — then up to 85% of your benefit might be subject to tax at your ordinary income tax rate.

The earlier column mentioned that taxes on Social Security are based on your “combined income,” which is your adjusted gross income — the figure you report on Line 11 of your 1040 tax returns — plus any nontaxable interest and half your Social Security benefits. Single filers who have combined income between $25,000 and $34,000 may have to pay income tax on up to 50% of their benefits while those with combined income over $34,000 may pay tax on up to 85% of their benefits. Married couples filing jointly may have to pay income tax on up to 50% of benefits if their combined income is between $32,000 and $44,000. If their combined income is more than $44,000, they could owe tax on up to 85% of their benefits. You can read more about how Social Security benefits are taxed on the agency’s website.

Your benefits can be taxable regardless of when you start. However, researchers have found that many middle-income people pay less taxes overall if they delay Social Security and tap their retirement funds instead. You can read more about the “tax torpedo” on the Financial Planning Assn. website.

Your husband’s required minimum distributions will be taxed as income unless he made nondeductible contributions to those retirement plans. If he did make after-tax contributions, then a portion of his withdrawals would not be taxed. Most people got a tax break for all their contributions, however, which means all their withdrawals are taxable.

A tax pro can look over the specifics of your situation, help you estimate your tax bill and make sure you have sufficient withholding to avoid penalties.


  1. John Fragua says

    Thank you for clearifying the confusing torpedo tax situation. I was also under the impression that my s/s benefits would be taxed at 85% but glad to hear it’s taxed up to 85% at our normal tax rate!:) I have been reading your wisdom for many years!