MA Social Security Recipients Are Reaping Benefits!
Statistics show that 39 out the 50 states give those who contemplate retirement a "much-needed" break as Social Security benefits are NOT taxable. That is a GOOD thing if you ask me as senior citizens with lower and middle incomes are shielded from any taxes. However, if your income falls above a certain amount, you could see a deduction on the Federal portion, but it does not amount to an exorbitant sum. It all depends on how much you made in the past while in the working world.
Do you want to avoid paying any type of tax regarding your Social Security benefits? If so, it is very important to consider your location:
We have some GOOD news if you live in our immediate tri-state region. Massachusetts and New York are 2 of the 38 states that will NOT charge any extra taxes and that's a plus for beneficiaries. Neighboring New Hampshire has NO state tax and is also included in the mix. But a trio of states within our vicinity WILL tax your Social Security income.
Connecticut and Rhode Island are NOT included in this perk, but in the long run, 2 more states will join in on this venture and we hope those aforementioned are both on the list. I am so fortunate to move up north as you learn something new each and every day.
The Green Mountain State of Vermont gives some recipients a break, but you need to look into this before making a move up north. If you are single making below $25,000 it's smooth sailing. Anyone earning between 25 and 34 thousand is subject to half their benefits being taxed. Anything over $34 thousand is subject to 85% while filing a Federal income tax return.
Other states where social security is taxable for the 2023 tax year include Colorado, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico and Utah.
You can also minimize your tax burden by exercising the following options: Lowering your tax burden in retirement isn't just about choosing a tax-friendly state. During your working years, consider contributing to tax-advantaged accounts that don't give you an upfront tax break so you can get the tax benefits.
Investing in a Roth IRA OR Roth 401(k) is a good option because your withdrawals won't be taxed in retirement, though you won't lower your tax bill for the year you contribute. This income won't count against you for Social Security's purposes, as the alternative is to make strong contributions to help shield your future benefits from taxes.
You can also consider a health savings account (HSA) if you have a high-deductible health plan as money stays with you from year to year if you don't use it, and withdrawals are never taxed if they're being used for a qualifying medical expense. This reminder: You'll pay ordinary income taxes on withdrawals from non-Roth retirement accounts.
BOTTOM LINE: This will result in more MOOLAH, MOOLAH, MOOLAH and that is a good thing if you ask me!
(Some information obtained in this article courtesy of www.fool.com/retirement)
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