If you are retired and only receiving social security and retirement income there is not a lot you can do to change your tax situation. Depending on your wife's age:
But some things you can do to lower your tax liability for next year would be:
- Maximize your retirement savings. You can contribute up to $23,000 to a 401K or $7,000 to an IRA. This will defer your taxes on the income until you withdrawal the funds.
- Contribute to a FSA through your employer.
- Do a home energy project. Doing something like replacing windows, doors or insulation can reduce your tax liability by up to $1,200. If you invest in solar or wind energy home improvement, the credit is 30% of the cost of the project with no cap. It can reduce all of your tax liability for the year and can be carried forward until used all up.
- Buy a new or used hybrid or electric vehicle. This credit can be worth up to $7,500 for new vehicles and $4,000 for used. For a single individual there is an income limit of $150,000 for a new EV and $75,000 for an used EV.
If you fall into the following, 85% of your social security is taxable income
- Single with income above $34,000
- Married Filing Jointly with income above $44,000
- Married Filing Separate regardless of income
If you fall into the following, 50% of your social security is taxable income
- Single with combined income between $25,000-$34,000
- Married Filing Jointly with combined income between $32,000 and $44,000
Your combined income is calculated by adding your
- AGI plus
- Nontaxable Interest plus
- 1/2 of your social security Benefits
Social Security Benefits Taxes
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