6. Social Security Taxes Can Eat Up Your Benefit Amount
It's easy to get things wrong about Social Security. Some people are already retired before they figure out that Social Security benefits are not always tax-free. Taxes on Social Security benefits take a further bite out of retirement budgets.
Depending on how much you earn, Uncle Sam might want a share of your Social Security benefits. To determine whether any of your benefits are taxable, compare the base amount for your filing status with the total of one-half of your benefit added to all your other income except tax-exempt interest.
Base amounts are:
–$25,000 if you're single, head of household or qualifying widow(er)
–$25,000 if you're married filing separately and lived apart from your spouse for the entire year
–$32,000 if you're married filing jointly
–$0 if you're married filing separately and lived with your spouse at any time during 2017
If you decide to retire abroad to get more bang for the buck with your benefit amount, check out the foreign tax rules. Some countries tax the Social Security benefits of expatriate Americans differently than the U.S. does.