Core Insights - Millions of Americans depend on Social Security benefits for retirement income, with up to 85% of these benefits potentially subject to federal income tax based on total household income [2][4] Taxation of Social Security Benefits - Taxation on Social Security benefits is determined by combined income, which includes Adjusted Gross Income (AGI), nontaxable interest, and half of Social Security benefits [4] - Single filers with combined income over $25,000 and married joint filers over $32,000 may face taxes on up to 85% of their benefits [4] Strategies for Managing Social Security Taxes - Social Security benefits are taxed at a lower rate compared to other income sources, making them a valuable income source for retirees [5] - Fidelity outlines two main strategies to manage taxes on Social Security benefits: 1. **Roth Conversion**: Converting savings into a Roth IRA allows for tax-free withdrawals without increasing combined income, thus not affecting Social Security tax [7] 2. **Delaying Social Security**: Waiting to claim benefits increases the amount received, reducing reliance on taxable IRA income for living expenses [7] Example Scenario - A hypothetical couple retiring at 65 plans to use a combination of Social Security and IRA withdrawals totaling $70,000 after taxes, factoring in the standard deduction of $27,700 and the 2023 income tax brackets [8]