When is Social Security taxable?

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 Q. When I start taking Social Security, I think I’ll still be working. When do Social Security benefits become taxable?

A. You didn’t tell us your age, and that’s an important factor here, based on whether you’re taking your benefit before or after your full retirement age.

If you start taking your Social Security benefit before your full retirement age and you’re working, that income may reduce your Social Security benefit, said Bryan Smalley, a certified financial planner with RegentAtlantic Capital in Morristown.

“If you are under your full retirement age for the full year, Social Security will deduct $1 for every $2 you earn above the annual limit — $15,720 for 2015,” Smalley said. “In the year in which you turn full retirement age, Social Security will deduct $1 for every $3 you earn above $41,880 for 2015, for the months leading up to the month you reach your full retirement age.”

After you reach full retirement age, Social Security will recalculate your benefit amount to give you credit for any months in which you did not receive a benefit because of your earnings, he said.

“While this may help recoup some of the benefit missed because of your earnings, it may not replace the higher benefit you would have received were you to have waited to start collecting your Social Security until a later age.

Smalley offered this chart:

You should note that 85 percent is the maximum amount of your Social Security benefits that can be subject to tax, said Howard Hook, a certified financial planner and certified public accountant with EKS Assoc. in Princeton.

He said that if you are working and have not yet reached your Normal Retirement Date for collecting benefits, you may have to give back benefits.

“This is not a tax but an actual payback of benefits,” he said. “Careful planning should be done to be sure you do not have to give back benefits if you are in this situation.”

That’s why it makes sense to meet with a financial advisor and your local Social Security office before you elect to take benefits.

Take a look at these examples to see how the math works.

Also check out this worksheet from the IRS for help.

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This story was first posted in July 2015.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.