http://www.smartmoney.com/taxmatters/index.cfm?story=20071016
Tax Matters
Will Your Social Security Benefits Be Taxed — Again?
By Bill Bischoff
Published: October 16, 2007
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THINK YOUR SOCIAL SECURITY benefits are always free from federal-income tax? Think again. In fact, depending on how much income you have from other sources, you may have to report up to 85% of your benefits on Form 1040 and pay the resulting federal income tax hit.
When this happens, you’re effectively getting taxed twice on the same dollars. The first time is during your working years when you pay federal income taxes on Social Security taxes that are taken out of your salary or self-employment earnings. The second instance occurs later on when you have to pay federal income taxes on your Social Security benefits. To make matters worse, depending on where you live, you may suffer the same double taxation fate under your state income tax rules, too.
While this is unfair, if not downright scandalous, it’s pretty much par for the course in the tax world.
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Surprise, the gooferment lied and the politicians got away with it. Careful calculation and planning is need to steer the minefield of taxation.
Bottom line: You’re not as well of as you think.
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