Retirees want to find states that do not tax Social Security benefits
Feb 27, 2013, 1:49 p.m.
The closer a person gets to retirement age, the more they should take a look at their future prospects for Social Security income, including which states tax that income and how they tax Social Security income. It is easy to submit a social security application online, as many people do. You also can check social security number accuracy and obtain an earnings statement that shows your previous earnings. Since your retirement income from Social Security is based on prior earnings, knowing this information will help you estimate your future budget plans.
At first glance, it may look easy to pick out the many states that have no tax on these benefits. There is another factor to consider before you pack up and move to one of these states. States have different property tax rates and sales taxes, two things that could also influence your choice of a state that might be better for your retirement years than where you presently are living.
Some states have no taxation on social security benefits or pensions. Others have no state income tax at all, and others are in the process of eliminating taxation of social security income. Some states will tax this income if total income is above a certain level. The best way to find out about your home state is to call your local tax agency and ask. If you are considering relocating to another geographical area for your retirement years, you should check out the destination state's tax policies.
There are 27 states that currently do not tax these benefits. Iowa is phasing out their tax on this income completely by 2014.
- Iowa (by 2014)
- New Jersey
- New York
- North Carolina
- South Carolina
12 states do not tax pensions or social security income: Alabama, Alaska, Florida, Mississippi, Nevada, New Hampshire, Pennsylvania, South Dakota, Tennessee, Texas, Washington and Wyoming.
9 states do not have state income tax at all; Nevada, Florida and Alaska are best known for this, but the southern states are preferred for retirement because of the nicer weather.
Payment of tax on your social security benefits can be accomplished in several ways. You can have tax withheld by the federal government to give you a return when you file your federal tax forms. You could just pay the amount in full when you file your state tax forms, or you can file a quarterly estimate to make payment fit into your budget a little easier.
Finding states that do not tax social security income is fairly easy, but other factors may come into play for your total tax picture. Don't overlook state taxes on property, high income or sales taxes. Plan ahead and make periodic watches on tax rates by checking the states you have in mind for retirement living.
Content Provided by Spot55.com
- First aid solution offers new hope for people with thin skin and ...