Strategies to Reduce Taxes on Social Security

You worked hard all your life, paying into the Social Security system. Now you're ready for payback time. Not so fast. Uncle Sam may want a piece of your benefits. Up to 85% of Social Security benefits may be subject to federal tax, but tax planning can help ease the pain.

      The tax hit will depend on your income and marital status. First figure your modified adjusted gross income, which includes non–Social Security sources of taxable income, such as pensions, wages, interest and dividends. Add in tax-exempt interest and certain other exclusions from income. Itemized deductions won't help you in this calculation, says Robert Seltzer, a certified public accountant in Beverly Hills, Cal.
Next add one-half of the Social Security benefits you receive for the year -- the total is your "provisional income." Then look at the IRS's "base amounts" for taxing Social Security. The base amounts are $32,000 for married couples filing jointly and $25,000 for single filers.

For the full article click the link: Strategies to Reduce Taxes on Social Security