Is Social Security taxable when working at Full Retirement Age (FRA)?

Unfortunately, your sister is incorrect. Social Security benefits can be taxable regardless of your age. It's based on your combined income, not whether you've reached FRA. Up to 85% of your benefits could be subject to income tax depending on your total income. The formula looks at your adjusted gross income + nontaxable interest + half of your Social Security benefits. For single filers: - If that total is under $25,000, your benefits aren't taxable - Between $25,000-$34,000, up to 50% may be taxable - Above $34,000, up to 85% may be taxable With your work income of $32,000 plus half your annual SS benefits (about $14,700), you're definitely in the taxable range.

This is one of the BIGGEST misunderstandings about Social Security!!! I went through the exact same thing last year. The government gets you coming and going - first they take SS tax from your paycheck your whole life, then they tax your SS benefits when you finally get them! It's totally ridiculous. And yes, working at FRA means your benefits aren't reduced, but they ARE still counted as taxable depending on your other income. The whole system is designed to confuse us seniors!!

While it's true your benefits may be taxable, there are strategies to reduce the impact: 1. Consider qualified charitable distributions from IRAs if you're over 70½ 2. Be strategic about when you take taxable withdrawals from retirement accounts 3. Look into tax-loss harvesting with any investments 4. Max out deductible contributions to retirement accounts if still eligible FRA only affects the earnings test (whether they reduce benefits while working), not taxation. It's a common misconception that many of my clients have. Have you done any tax planning with a professional? With your accounting background, you might find some additional strategies specific to your situation.

my uncle got hit with this last year he was so mad! he said almost 80% of his SS check was taxable because he keeps working. but he did say that he filled out some worksheet with his tax guy that helped figure it out. something about combined income? i think its on the SSA website too.

I've been trying to reach someone at Social Security to ask this EXACT QUESTION for three weeks! Every time I call, I either get disconnected or told the wait time is over 2 hours. Has anyone had luck getting through to an actual person at SSA lately?

Can I point out how RIDICULOUS it is that the SSA and IRS are technically separate agencies but they coordinate to tax our benefits?? The right hand absolutely knows what the left hand is doing when it comes to taking our money!! And what really burns me up is how they calculate that "combined income" thing. Using half your SS benefits plus all your other income is just a sneaky way to push more people into the taxable brackets. I retired thinking I'd finally get a break, but NOPE!

Thank you all for the helpful information! I'm definitely going to look into those tax strategies and maybe meet with a tax professional. It's disappointing to learn that my benefits will be taxed, but at least I understand the situation better now. One more question - does my state also tax Social Security benefits, or is this just at the federal level?

I had this same issue! The whole FRA thing is so confusing. The benefits aren't reduced when you work which is nice but then taxed which isn't nice lol. I actually have a question too - does anyone know if the tax withholding form (W-4V) is worth filling out? Should I have SS withhold taxes automatically or just pay quarterly?

my mom worked after FRA and she said everythng over like $80k combined made her SS taxable at the full 85%. but she said its still worth working cause the extra money even after taxes was way more than just living on SS alone

To clarify a key point that comes up frequently in these discussions: the taxation of Social Security benefits and the earnings test are two completely separate concepts: 1. The earnings test only applies BEFORE Full Retirement Age and can reduce your benefits if you earn over certain limits. 2. Taxation of benefits can apply at ANY age and is based on your combined income (AGI + nontaxable interest + half of SS benefits). Reaching FRA eliminates the earnings test, but doesn't impact taxation. Many beneficiaries confuse these two distinct policies. It's also worth noting that these tax thresholds ($25,000/$34,000 for singles) haven't been adjusted for inflation since they were introduced in 1984, so they affect more beneficiaries each year.