Episode 32: Can I Reduce Taxes On My Social Security?
Have your question answered on the Money Wisdom Question Series!
Thank you for joining us for Episode 32 of our Money Wisdom Question Series, where we answer common financial and retirement investment questions. Today’s question is, “Can I reduce taxes on my Social Security?”
Your Social Security Taxes Depends on a Formula
The simple answer is yes, you can reduce taxes on your Social Security. However, you might not want to because of what it entails. The amount of taxes that you pay on your Social Security is dependent on a formula that takes into account your other income. This could be investment or earned income or K-1 income from a partnership that you’re a part of. Any other type of income is going to go into this formula that says whether you can increase or decrease taxes on your Social Security.
It Is All Dependent on Your Other Income
Now, here’s the trick. You can get zero taxes on your Social Security if you don’t have other income or if you have a small amount of other income. Some people say, “Well, I want $10,000 a month to live on.” You can still reduce your, quote, “income”. How can you do that? Let’s pretend I had $500,000 in the bank and I’ve already paid taxes on that money. If I live off that cash flow, if I start drawing down $10,000 a month, that does not show up as income on my tax return. So, if I’m doing that, I have no other income.
Let’s say I leave my retirement money alone completely. Maybe I’m under 72 and I don’t have to take any retirement money out. I could actually use bank money that I’ve already paid taxes on and take my Social Security taxes and take them to zero. I get to keep my entire Social Security check.
The Bottom Line
I know I got a little technical there, but the bottom line is you can reduce taxes on your Social Security income, but you have to manipulate, for lack of a better word, your overall taxable income.
The formula that decides how much money you’ll pay in taxes on Social Security is part of your tax return. They take something called provisional income and that’s what you want to reduce. It gets a little technical, but it’s simpler than you think.
I want to prompt your mind to be thinking about that because you should be dealing with a financial planner that is helping you reduce taxes in all different areas.
Thanks for joining me and I hope you found this information helpful!
P.S. If you enjoyed this topic and want to learn more, download our offer, “Are You Paying Too Much in Taxes in Retirement?”
P.P.S. Feel free to submit questions here for a chance to have them answered!
Information presented in our podcasts is considered current as of the created date. Over time, some information presented may become stale. We recommend you consult with your Financial Professional before making any changes based on information contained here.
Johnson Brunetti is a marketing name for the businesses of JB Capital and JN Financial.
Investment Advisory Services offered through JB Capital, LLC. Insurance Products offered through JN Financial, LLC.
The guarantees provided by any type of insurance contract are based on the claims-paying ability of the insurance company.
Related Resources
-
Podcast Episode 414: What Does the Big Beautiful Bill Really Mean for Your Retirement?
There’s been a lot of noise around the One Big Beautiful Bill Act (OBBBA), an 887-page piece of legislation that just reshaped key elements of the tax code. But what does it actually mean for your… -
Social Security Made Simple
Social Security is anything but simple — but understanding how to make the right decisions doesn’t have to be. When it all boils down, knowing when to take Social Security, how to take it, and how… -
Social Security Myths Debunked
With so many rules and choices involved, it’s easy to feel overwhelmed or intimidated by Social Security. As a key source of retirement income, this decision deserves careful consideration, which … -
Podcast Episode 413: Will Social Security Run Out?
Prefer to watch? Click here to watch and listen on YouTube. Social Security has been making headlines lately, and for good reasons. According to current estimates, the Social Security Trust Fun… -
How Does the Big Beautiful Bill Affect Me?
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, bringing significant changes to the U.S. tax code. But what does it mean for you? What actions should you consider? And… -
What’s the Right Medicare Plan for Me?
There is a lot to consider when choosing the right Medicare plan: How often do you visit the doctor? Do you have any chronic conditions? Do you take prescription drugs regularly? Answering these q… -
What Happens to My Retirement Accounts When I Pass Away?
What happens to your retirement accounts after you die depends largely on your personal situation and legacy planning goals. Are you single or married? Do you have children? Do you want to leave m… -
Preparing for RMDs
Regardless of where you are in your retirement planning journey, required minimum distributions (RMDs) are a key factor to keep in mind. Gaining clarity on RMDs now can help you make more informed… -
Staying Ahead of the Tax Curve
Retirement doesn’t mean you stop paying taxes – but there are ways to minimize the bite in the long run. With thoughtful, proactive tax planning, you can stay ahead of the curve and keep more of w… -
Can I Still Retire Comfortably If I’m Behind on Saving?
You’ve worked hard to reach retirement, and you deserve to enjoy it comfortably. But what if you discover you’re behind on your savings goal? In this week’s Money Wisdom Question Series, Nichol…
