Despite ongoing efforts of Social Security advocates and educators, many retirees are shocked to discover that Social Security benefits are subject to taxation.
Up to 85% of clients' Social Security benefits may be subject to federal income tax if their combined income exceeds certain thresholds. In addition, recent tax law changes are expected to provide significant but temporary benefit tax relief for many seniors — even though the fundamental Social Security taxation rules remain unchanged.
As discussed in a new analysis from the Colcom Group, an accounting and consulting firm, financial advisors and tax professionals need to help clients achieve tax clarity, both in terms of drawing Social Security benefits and in overall retirement income planning. Failing to do so can result in disappointed clients, at best, and unexpected retirement bankruptcy, at worst.
See the accompanying slideshow for seven Social Security tax rules that all advisors should know, drawn from the Colcom Group report and ThinkAdvisor’s Tax Facts library.
Want more tax-focused insights? Find current and accurate answers to your tax questions with Tax Facts.
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