Hi @BKPAKP ,
Congratulations on your upcoming retirement!
Annuities payments can make up to 85% of your Social Security taxable. The type of annuities and how you funded the annuities ( pretax monies or after-tax dollars) will impact your tax liability differently.
Annuity Taxation
If pretax monies from a qualified retirement plan, such as a 401(k) or IRA, are used to purchase an annuity, then all payouts are taxable just like other withdrawals from DC plans. If after-tax dollars, such as those from a Roth IRA, are used to purchase an annuity, then the portion of the payout that represents return of principal is not taxed (https://www.ssa.gov/policy/docs/issuepapers/ip2017-01.html)
Annuity Payments and Social Security Taxation
If the taxable amounts of the annuities payments add up to more than $25,000 for an individual or $32,000 or a married couple filing jointly, you pay federal taxes on a portion of your benefits, regardless of your age.
For individual filers, if your combined income* is:
- Between $25,000 and $34,000, you will owe taxes on up to 50% of your Social Security benefits or
- Greater than $34,000, you will owe taxes on up to 85% of your Social Security benefits
For joint filers, if your combined income* is:
- Between $32,000 and $44,000, you will owe taxes on up to 50% of your Social Security benefits or
- Greater than $44,000, you will owe taxes on up to 85% of your Social Security benefits
For more detailed information regarding Annuities and Pensions , please go to :
- Topic No. 410, Pensions and Annuities
- What Income Is Included in Your Social Security Record?
- Social Security and paying taxes in retirement
Thank you and good luck!
