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Justin Anderson & Bibi Taylor: Paying Taxes on Social Security Benefits

And how do Roth IRA distributions factor into the equation?

[Noozhawk’s note: One in a series of Social Security-related columns by Ameriflex representatives. Click here for a related article.]

Q. Will you pay taxes on Social Security benefits?

A. If an individual’s total earned income plus one half of Social Security and any interest from tax-free municipal bonds is more than $25,000, or more than $32,000 for a couple filing a joint return, Social Security benefits will be taxed at 50 percent. The portion of benefits that are taxable increases to 85 percent if “provisional income” is more than $34,000 or $44,000 respectively.

Q. Are Roth IRA distributions considered income when calculating the taxability of Social Security benefits?

A. Roth IRA distributions are not considered earned income and therefore are not a factor in the formula for taxation of Social Security benefits. Furthermore, unlike traditional IRAs, which have a required minimum distribution requirement beginning at age 70½ and where distributions are taxable, Roth IRAs do not require minimum distributions. The aforementioned factors should be considered when planning for retirement.

Readers: Email your Social Security questions to .(JavaScript must be enabled to view this email address).

— Justin Anderson, CFP, CRC, CLU, is a financial planner and Bibi Taylor, MBA, is the Social Security project coordinator at AmeriFlex, 3700 State St., Suite 310, in Santa Barbara. Call 805.898.0893 for more information. Financial advisors and registered representatives associated with AmeriFlex Financial Services offer securities and advisory services through SagePoint Financial Inc., member FINRA/SIPC. Insurance services offered through AmeriFlex Financial Services, which is not affiliated with SagePoint Financial Inc. or registered as a broker-dealer or investment advisor. Registered representatives may only discuss and/or transact securities business with residents of the following states: AR, AZ, CA, CO, FL, GA, IL, IN, MI, MO, NC, ND, NJ, NM, NV, NY, OH, OR, PA, PR, SC, TX, VA, WA, WI.

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