Taxes in the United States are a very serious issue. This is true for both retirees and workers. Everyone must pay their mandatory taxes, even if they only collect Social Security. In the case of not being sure if we have to pay taxes or not, seeking help from a professional is the best idea. No one wants to get in trouble with the tax office for not paying this obligation on time.
Most of the time, users who collect Social Securitydo not have to pay taxes. But when they have some extra income, things change. This extra income can come from work, investments or other different sources. But there are some of the incomes that are not taxable, so it is good to know this to take it into account.
Anyway, as we have previously advised, having professional help is the best option. If we don’t know clearly what kinds of taxes we have to pay with our Social Security check and some extra income, we should seek help. It is not pleasant to discover some time after collecting some extra money that we have to pay taxes.
Such unpleasant surprises should be avoided at all costs. Paying taxes is mandatory, but not in some cases. However, it is important to file a tax return, even if we do not pay anything afterwards.
Retirement Incomes that are not taxable for Social Security purposes
These two types of income are not taxed during retirement and can be a great benefit to Social Security users. Having one of these incomes means being able to count on more money every month.
However, we must also keep in mind that we cannot always count on this income. In addition, one of these types of income needs to be planned in advance, so without much thought before retirement it is impossible to get it.
Inheritances. If a retiree receives an inheritance, it will not affect his or her Social Security check. However, it is not the best of plans to rely on the inheritance to pay the bills. Having this type of income is always a welcome financial bonus, but it is not common to receive it.
Roth withdrawals. Here comes the crux of this non-taxable income. By cashing a Social Security check and a roth withdrawal at the same time, we do not have to pay extra taxes. This is very simple to understand. When we set up the pension plan with a 401(k) or IRA we are already paying taxes. Therefore, receiving that money back does not require paying any more taxes.
With these two points in mind we can now plan for our Social Security and the taxes around it.