10 States Still Tax Social Security Benefits. Is Yours One of Them?

Excerpts from Nasdaq.con Website, 02/16/24: "Missouri and Nebraska residents got some good news on Jan. 1, 2024, when their states officially ended their Social Security benefit taxes. Now there are only 10 states left that still take a cut of their seniors' Social Security checks. If you live in one of them, it's important to understand how your state government handles these taxes and what you could owe. The following 10 states still tax the Social Security benefits of some retirees:

• Colorado

• Connecticut

• Kansas

• Minnesota

• Montana

• New Mexico

• Rhode Island

• Utah

• Vermont

• West Virginia

It's worth noting that Missouri and Nebraska residents could still owe Social Security benefit taxes when they file their 2023 returns this year. However, they won't have to worry about this in future years."…

Our take: Taxation of Social Security Income (SSI) as part of the overall portfolio of taxation may appear significantly different and less desirable than the bulk of the states that do not tax SSI. Similarly, states that charge "no state income tax" can leave us thinking we're missing out if our home state does charge state income tax (for example). However, states (and other locales) can and do use a variety of mechanisms (high sales tax on purchases, higher fees on businesses to operate which get passed on the consumer, et al) to raise funds for government operations. Population densities matter, too, as the leverage of scale creates more taxpayers. However, that same density might create bidding wars on the limited supply of housing, etc. Best to peel back the layers and calculate total cost of taxation and residency in your desired area.

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3 Signs You Should Apply for Social Security in 2024

Excerpt from Motley Fool, 01/30/24: When to apply for Social Security is an individual decision, and the right answer varies from one person to the next. You must consider life expectancy and your financial situation when deciding when to apply. Delaying Social Security increases your checks slightly each month until you turn 70.

Our take: Without a crystal ball to precisely predict lifespan, there are situations where opting to start Social Security at 62, particularly for those with lower incomes, is a sensible choice. Many of us have witnessed cases where friends or family members passed away at ages like 63 or 66, and in hindsight, initiating Social Security benefits at 62 could have made a significant difference for loved ones or eased financial burdens.

Even within a single household where two individuals are eligible for Social Security, one might be a lower earner or not earning at all and opt to begin receiving a reduced Social Security benefit earlier, while the other might be a high-income earner and choose to wait. As noted, delaying until age 70 within the "age 62 to age 70" range increases the Social Security payout. However, once again, without a crystal ball, it's impossible to know for certain what the best course of action is. View full article.