Tax Experts

Tax Rules on Social Security Benefits and Retirement Income

By Kevin McCormally, Editorial Director, Kiplinger.com

March 2008

Q: If I start taking Social Security benefits after I reach my normal retirement age 65, will any of my Social Security dollars be taxable if I receive pension benefits and withdraw money from my 401(k)?
-- Kathy S.

Kevin's Answer:

That all depends on how much income you have.

If your "provisional income" (which is your adjusted gross income -- including 401(k) withdrawals and half of your Social Security benefits, plus any tax-exempt interest from mutual bonds) exceeds $25,000 ($32,000 on a joint return), then up to half of your Social Security benefits can be taxable.

If your provisional income exceeds $34,000 ($44,000 on a joint return) up to 85% of your benefits are taxable.

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