Retirement tax questions

Hello @JimPK,

When you receive Social Security Benefits and other income (such as a distribution from an IRA in your case), you will have taxable income. Social Security Benefits are taxable to the extent that 1/2 of your Social Security Benefits (calculated as 50% of the amount shown in Box 5 of your SSA-1099) plus your other income (the distribution from your IRA in this case) exceeds your standard deduction.

For example, let's assume that your standard deduction as a married taxpayer filing jointly is $28,000. Let's also assume that you received $32,000 of social security benefits and that you withdrew $10,000 from your IRA. Finally, let's also assume that your spouse receives no Social Security Benefits and any other income.

You would first need to determine if the $32,000 of social security benefits is taxable. It would be calculated as (50% * 32,000) + (10,000) = $16,000 + $10,000 = $26,000. Because $26,000 is less than $28,000, none of the $32,000 of Social Security Benefits you received will be taxable. 

Now, given that none of the $32,000 of your Social Security Benefits are taxable, the only income that would potentially be subject to tax is the $10,000 IRA distribution. Because the $10,000 is less than your $28,000 standard deduction, you will have taxable income of $0 and will therefore, not owe any tax to the IRS.

So, ultimately, you can withdraw some money from your IRA while also receiving Social Security Benefits. However, it doesn't take much to push you over the threshold of having to pay tax. If both you and your wife are receiving Social Security Benefits, then you will generally be subject to tax on any amounts withdrawn from an IRA because if you and your wife are receiving the maximum amount of Social Security Benefits, half of that amount is likely to exceed your standard deduction without regard to any other income.