By Diane M. Wilson CFP®  Understanding how Social Security benefits are taxed may enable retirees to keep more of their benefits. Social Security benefits are taxable if your “provisional income” is above a certain level. Your “provisional income,” is your adjusted gross income, plus ½ of your Social Security benefits, plus any nontaxable interest, plus income from foreign sources.

Your Social Security benefits are completely tax free If your provisional income is below $25,000 for singles and head of households, or less than $32,000 if married filing jointly.

Social Security benefits may be taxed up to 50% if your provisional income is between $25,000 and $34,000 for singles and head of household, or between $32,000 and $44,000 if married filing jointly.

There is a maximum amount of your benefits that can be taxable. Social Security benefits may be taxed up to 85% when provisional income passes $34,000, for singles and head of households, or more than $44,000 if married filing jointly.  15% of your benefits will not be taxed.

Taxable Income Ranges

Social Security Benefits                  Single/Head Of Household                 Married Filing Jointly 

Tax Free                                                     < $25,000                                           < $32,000

Up to 50% taxed                                   $25,000 – $32,000                             $32,000 – $44,000

Up to 85% taxed                                        > $32,000                                           > $44,000

Strategies are available to help retirees keep income below the cutoffs and keep taxes on your Social Security benefits low. Keeping taxes low in retirement requires planning.  A clear understanding of the rules and how Social Security benefits are taxed is a must to make the best decisions for a successful retirement. Social Security may be the most important income stream a retiree may receive and keeping more of your benefits is a worthwhile goal.  Professional assistance from a Social Security advisor should not be overlooked.  The expenditure for professional advice may help you keep more of this very important benefit.