Josh Scandlen Podcast

As we discussed in the previous chapter, if a married couple’s provisional income is less than $32k they pay no tax on their Social Security benefits.  However, for a single taxpayer, if provisional income is greater than $34k then up to 85% of his/her Social Security benefit will be subject to tax.  Let’s say you are a single taxpayer and have a $30,000 distribution from a Traditional IRA in addition to your $30,000 of Social Security benefits. In this case your provisional income is $45,000. You will pay tax on your Social Security Benefits.  Remember: Provisional Income is half your Social Security benefit plus any other income you receive (Roth distributions excluded). Now say that $30,000 IRA distribution came from a Roth. In this case your provisional income is only $15,000 because Roth IRAs are not included in the calculations.  So, you pay NO TAX! They each have $60,000 of income, $30,000 from Social Security and $30,000 from IRAs. Judy’s IRA income is from a Traditional but Jane’