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Chapter 6. Income Taxes > Social Security Taxes

Social Security Taxes

A recurring theme in this book is the Government giveth and the Government taketh away. So although the government does pay seniors Social Security benefits (with our own money), it also taxes that money sometimes.

How much of your Social Security benefits are taxed depends on what is referred to as your “provisional income” as well as your filing status. Your “provisional income” is computed by adding to your “taxable income” amounts of your income that are nontaxable along with half of your net Social Security benefits before subtracting adjustments to income, except for student loan interest, which I am sure affects so many senior citizens. An example of a type of income that is not taxable but that is used to determine the provisional income is tax-exempt interest, such as municipal bond interest as reported on line 8b of your income tax return Form 1040. Logical? No, but remember it is the Internal Revenue Code. It is not supposed to make sense.


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