if you're watching this video you have either already begun taking your Social
Security benefits or you're thinking about taking your Social Security
benefits soon this is an exciting time when you finally start to receive money
back on all the Social Security and Medicare taxes you pay it in throughout
your life! but don't worry you're not done paying taxes on your Social
Security just yet now you get the privilege of paying
income taxes on your Social Security benefits as well
52% of Americans pay income tax on their annual Social Security benefits luckily
for you fine folks I'm going to share a few tax saving tips to help you minimize
the amount of taxes you pay on your Social Security as much as possible
although you might have to pay some taxes on your Social Security benefits
the good news is at least 15% of the total amount of Social Security income
you receive during the year will be completely tax-free now the bad news is
on the flip side of that that means 50% up to 85% of the total amount of income
you receive from Social Security each year might be subject to income taxes in
this video you're about to learn how a little upfront planning can help you
minimize your taxes especially on your Social Security benefits let's begin I
have six tax saving tips and all for you guys today
the first way to begin saving taxes on your Social Security benefits and my
favorite way is the Roth IRA both you and your spouse can have one qualified
Roth IRA distributions are not factored into the social security income equation
which is freaking awesome
as an example a person could receive $25,000 a year and dividend
distributions from their Roth IRA and 25,000 a year in Social Security
benefits and still pay zero in tax that's a full four thousand dollars a
month that you get to keep and keep all of it the IRS can't touch that number to
begin taking taxable IRA distributions before drawing Social Security this
second strategy takes a bit of planning but it can be really powerful
of course we're assuming in this instance that you're older than 59 and a
half and can begin taking distributions from your 401k or traditional taxable
IRA by taking some IRA distributions or 401k distributions early it allows a
person to delay drawing from their Social Security this does two things
first by delaying their Social Security benefits it will allow them to draw
higher Social Security benefits in the future secondly by drawing some of their
IRA or 401k they will be able to take lower required minimum distributions in
the future the net result is assuming all the rules are the same you can hire
Social Security benefit distributions in the future and you minimize your taxable
income from other sources now this strategy could go very wrong if
a person blows their distributions from their retirement account however a
disciplined person could always reinvest that money into growth stocks or
dividend paying stocks within a taxable brokerage account and grow this money
even further with careful thought out planning this strategy could work very
very well for future retirees
number three if you're feeling charitable this one might be for you
remember you do not always have to take your required minimum distribution you
could always donate that money or donate the RMD if you don't need the income and
can live without it and want to minimize your taxes even further you can always
choose to donate a portion or potentially all of your IRA distribution
to a qualified charity now working as a CPA I've seen this done several times
and it works very effectively people who would normally take ten twenty thousand
dollars of a required minimum Eyre distribution that money goes directly to
a charity it never comes to them at all it goes directly to the charity of their
choice and if let's say it's twenty thousand dollars they donate well now
there's twenty thousand dollars that is no longer subject to income tax which
also reduces all the amount of other taxes they pay on their other forms of
income like Social Security so it works very well if you have a charitable cause
you're passionate about and feel like donating number four actually involves
quitting quit what you ask well I'm actually encouraging you to consider
quitting your part-time job now normally I would not suggest someone quit their
part-time job but when it comes to minimizing one's income taxes on their
Social Security benefits this might actually make sense if a person can
afford to do so if you drastically reduce your income it will also reduce
your income taxes you have to pay and without those taxes now sure it's gonna
feel like a pay cut but without those additional taxes you might be paying
anyways it might not feel like that big of a pay cut now remember when it comes
to minimizing income taxes you want to reduce your taxable income as much as
possible and that is one strategy you can do if you can afford to do so so
please consider it okay guys number five is very practical and speaking of
reducing one's taxable income let's talk about debt and how that factors into the
big picture of your retirement and what income is subject to taxation paying off
your debt before you retire is one of the best things you can do to help you
reduce your taxes the less taxable income you need to live off of the less
tax you will pay not only that is having no debt increase
is your monthly cashflow it increases your monthly cash flow in that allows
you to draw down your 401k and other investment accounts at a slower pace
because you no longer need that additional income to service that debt
unfortunately most debt payments are no longer tax-deductible are helping people
with their taxes unless they own a business or a rental real estate under
the new tax laws so in my opinion if you're getting ready to retire are
already retired I think it's time to get rid of that debt if you can now of
course you can still deduct your mortgage interest but that's assuming
you have enough items deductions in order to itemize that remember the
standard deduction basically just doubled so people are gonna be less and
less likely to get any taxable benefit from having a whole mortgage interest
let's move on to the sixth and final tip now I'm not gonna sugarcoat this guys
this niks topic is a very emotional topic for most people and you know most
people I don't think would be emotionally ready to do this so but
let's talk about it anyways because this video is all about how to minimize taxes
on your Social Security benefits now most people cannot begin to emotionally
fathom the idea of delaying their Social Security benefits one day longer than
they're entitled to it however if you're interested in
potentially saving thousands upon thousands of dollars of income taxes
while waiting for an even higher monthly benefit payout this strategy is one that
you actually want to consider now I realize I'm fully aware that most people
will not even begin to entertain the idea of delaying their Social Security
benefits and that's fine it's totally up to you I'm not gonna tell you what to do
with your retirement your money but if you come here to learn how to minimize
your taxes as much as possible this is why you might want to listen to this
strategy what I've found from experience in the real world is the people who are
very well-off as those with substantial amount of retirement assets are the ones
who could afford to take a lower social security benefit payout and they're also
much more likely to delay taking those Social Security benefits at age at full
retirement age or closer to age 60 now when I talk about this strategy I'm not
suggesting you necessarily wait till age 70 but I
I'm suggesting at least wait until closer to full retirement age or at full
retirement age
from what is found is working as a CPA in the real world the people who really
need or could benefit from a higher social security payment because they
have very little to no retirement assets outside of Social Security are the ones
I find the most taking social security at 62 so the poor they are the more
likely they are to take a lower Social Security benefit payment now I
understand that you're gonna do what you're gonna do so I'm not gonna try to
convince you to the lay your Social Security benefits but if that's a tax
saving strategy you want to consider I would at least suggest you consider it
because remember the higher amount of Social Security benefit payout you can
receive later on the less you have to withdrawal down your other assets like
your 401k your IRS etc and so you could potentially pass those investments on to
future generations so think about it don't just think about yourself if you
want to be charitable and at least think about charity think about your future
family members of who you might want to pass that money onto to to benefit the
future generations you can't pass on your Social Security but you can pass on
your other assets but you can't pass them on if you've depleted them all
because you're receiving so little from Social Security
okay guys those were six strategies to not only reduce your taxes on your
Social Security benefits but reduce your overall income taxes as a whole so doing
a little planning up front on this stuff can go a long way into saving you
hundreds to even thousands of dollars on income taxes so before you guys leave
today let me know what strategy you would most likely consider for yourself
of the six we just discussed or if you have questions about anything we
discussed in today's video feel free to leave a question down below ask away
guys that's why I'm here besides that I just love reading your comments and
talking to you over YouTube it's one of the most rewarding parts of doing this
channel alright guys if you'd like the video today make sure you hit the like
button before you leave share this information with a friend especially
somebody who's thinking about drawing Social Security soon or wants to
minimize their taxes on their retirement income as much as possible of a lot more
video around this topic in the future of how
to minimize your taxes in general on your investments etc so stay tuned for
more and if you have not already subscribed the money in life TV well
welcome to the channel Bunny and life TV is all about helping you become fiscally
fit as we teach finances investing and taxes on a regular basis well guys that
is all the information I have for you today thank you so much for spending
time with me here on YouTube I always appreciate it I hope you have a great
week no matter where you're at out there in the country and until next time
remember take this information and use it to live your life on Kage I'll see
you guys in the next week's video bye everybody
peace