What are the tax implications of spousal benefits?

What are the tax implications of spousal benefits?

Spousal benefits can affect your tax situation, especially regarding Social Security and retirement accounts. Are you asking about a specific type of benefit?

Yes, I'm specifically interested in Social Security spousal benefits.

Social Security spousal benefits are generally not taxable if your combined income is below a certain threshold. However, if your income exceeds that threshold, up to 85% of the benefits may be taxable.

What is the income threshold for taxability?

For 2023, if you file as an individual and your combined income is between $25,000 and $34,000, up to 50% of your benefits may be taxable. Above $34,000, up to 85% may be taxable.

Are there any strategies to minimize taxes on these benefits?

Yes, strategies include timing your benefits, managing other income sources, and considering tax-efficient withdrawal strategies from retirement accounts.