Your understanding of the Social Security (SS) taxation formula is correct. The amount of Social Security included in your Medicare MAGI calculation is only the portion that is already taxable.
The Medicare MAGI calculation begins with your Adjusted Gross Income (AGI) from your tax return (Form 1040, Line 11). Your AGI already includes the taxable portion of your Social Security benefits. Add back the Tax-exempt interest (e.g., municipal bond interest).
https://secure.ssa.gov/poms.nsf/lnx/0601101010
Medicare uses a two-year lookback to determine IRMAA. Your 2023 MAGI determine your 2025 Medicare premiums.
Let’s say in 2023 you had:
- $40,000 in IRA distributions
- $20,000 in taxable Social Security benefits
- $5,000 in tax-exempt interest
Your MAGI for IRMAA = $40,000 + $20,000 + $5,000 = $65,000
If you're filing jointly, you're well below the 2025 IRMAA threshold of $212,000, so you'd pay standard Medicare premiums.
@user17609888305 Thanks for the question!!
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