Look out for the Social Security tax torpedo.
It may be heading toward the hull of your retirement accounts as we speak.
I’m in favor of taxing Social Security benefits, as the United States has done since 1983.
In certain circumstances, because of the tax torpedo and another twist nicknamed the capital gains bump zone, someone in the 12 percent tax bracket who takes a $1,000 retirement distribution could end up paying $499.50 in tax — for a marginal rate of nearly 50 percent.
There are ways to protect yourself from paying more tax than necessary, but they’re not simple.
Persons:
Donald Trump’s
Organizations:
Social Security, Security, Internal Revenue Service
Locations:
United States