Question

Assuming a couple married filing jointly received $40,000 in Social Security benefits, they would only need $12,000 in other income to reach the $32,000 threshold. If they had retirement plan income, pension, or investment income, this threshold can be easily reached.

What would you recommend to a client on how they might reduce the amount of Social Security benefit that is subject to tax if they have surpassed the threshold?

Answer 1

Step 1

They want to reduced the combine income to $32000.

Combine income	If the both are filing jointly
Less than 32000	Security benefits is considered as not taxable.
32000 to 44000	50 percent of security benefits is considered as taxable.
More than 44000	85 percent of security benefits is considered as taxable.

Step 2

• 50% of Social security benefits is considered for combined income.
• Other income = Retirement plan income, pension, or investment income
• Combine income = 50% of Social security benefits + Other income

Step 3

They needs to withdraw Social security benefits equals to = [32000 - Other income] x 2.

It means the they have other income is 32,000, then no needs to withdrawal of Social security benefits.

It means the they have other income is 20,000, then needs to withdrawal of 24,000 Social security benefits.

It means the they have other income is 12,000, then needs to withdrawal of 40,000 Social security benefits.

If they have other income [A]	50% of Social Security benefits [B = 32000 - A]	Social Security benefits [C = B / 50%]
32,000	-	-
31,000	1,000	2,000
30,000	2,000	4,000
29,000	3,000	6,000
28,000	4,000	8,000
27,000	5,000	10,000
26,000	6,000	12,000
25,000	7,000	14,000
24,000	8,000	16,000
23,000	9,000	18,000
22,000	10,000	20,000
21,000	11,000	22,000
20,000	12,000	24,000
19,000	13,000	26,000
18,000	14,000	28,000
17,000	15,000	30,000
16,000	16,000	32,000
15,000	17,000	34,000
14,000	18,000	36,000
13,000	19,000	38,000
12,000	20,000	40,000