Mistake No. 8: You don’t plan for taxes on Social Security benefits
If you earn a substantial income from wages or dividends, you should be expecting to see up to 85% of your Social Security benefits subject to federal income taxes. For example, if you decide to file individually and your combined income is between $25,000 and $34,000, half of your benefits could be taxed.
The number of benefits that are subject to income taxes depends on a couple of factors, like your combined income, which equals your adjusted gross income, any nontaxable interest income, and 50% of your Social Security benefits. If your combined income is over $34,000, 85% of your benefits will be taxed.
