The Peach State is among the top 10 tax-friendly states for retirees, as ranked by Kiplinger in 2017. Social Security income is exempt from Georgia state taxes, as is up to $35,000 of most types of retirement income for anyone age 62 to 64. When you hit 65, the exemption rises to $65,000 per taxpayer.
Eligible retirement income includes pensions and annuities, interest, dividends, net income from rental property, capital gains, royalties, pensions, annuities and the first $4,000 of wages and other earned income. Many Georgia seniors can also claim property tax exemptions above and beyond normal homestead exemptions.
Social Security Tax-Smarts
Just because Social Security benefits aren’t taxed at the state level in Georgia doesn’t mean you’re off the hook. Uncle Sam is probably going to want a bite, and the amount subject to taxes will be calculated on a sliding scale based on your income.
Coordination Is Everything
Because the tax rules focus so much on income, it’s important to coordinate when you start taking Social Security benefits. You’ll want to weigh when to take benefits with when you expect to receive income from other sources.
For example, you might be tempted to start taking benefits as early as possible — even if you’re still working. The gotcha here is that the wage income you’re earning in that paycheck can easily bump you over the income thresholds at which your benefits will become taxable. Even worse, you’re likely to be in a higher tax bracket because you’re still working, so the tax hit will be a double whammy. Waiting to claim benefits until after you’ve quit working may be smarter, but it really all depends on your financial situation.
One Size Does Not Fit All
The best retirement income strategy varies based on your individual circumstances, so it’s impossible to give one-size-fits-all advice. But we can help you think through your situation — including how to navigate the Social Security taxation rules and how to reduce the amount you have to pay to Uncle Sam. Just call the office to make an appointment today.
(Source: smartasset.com/retirement/georgia-retirement-taxes)
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Social Security Fast Facts
Did you know …
- President Franklin D. Roosevelt signed the Social Security Act into law on August 14, 1935.
- Ida M. Fuller, a retired legal secretary in Vermont, was the first person to collect Social Security; her check, paid on January 1, 1940, was for $22.54.
- As of December 31, 2018, about 176 million people were paying Social Security taxes, and about 63 million were receiving monthly Social Security benefits.
- To qualify for Social Security retirement benefits, you must be at least 62 and have paid into the system for 10+ years.
- The longer you wait to collect Social Security (up to age 70), the higher the monthly benefit you’ll receive.
- Your spouse and/or ex-spouse may be eligible for benefits based on your earnings record.
- Social Security may provide benefits to your spouse and younger children in the event of your death.
- If you can’t work due to a long-term disability, you may be eligible for Social Security disability benefits.