ImagiSOFT Social Security Income Tax Calculator

Example 1: Mary

Mary, a 79-year-old widow, depends on 5% interest from her $500,000 savings. Concerned about interest rate drops, she considers:

• $10,000 Pension income,
• $25,000 Interest income,
• $15,000 Social Security,
• Total: $50,000 ($23,725 Taxable Income. Social Security 78% taxable).

Tax: $3,854

With a 10-year split annuity shifting $25,000 interest:

• $10,000 Pension income,
• $6,591 Interest income,
• $22,080 Tax-free Return of Principal,
• $15,000 Social Security,
• Total: $53,671 ($16,591 Taxable Income. Social Security 78% taxable).

Tax: $364 | Benefit: $7,161 (Taxes down $3,490, income up $3,671).

Example 2: $7,774 Tax Savings

Jack and Susan, filing jointly, have:

• $60,000 IRA income,
• $40,000 Social Security,
• Total: $100,000 ($94,000 taxable, SS taxed at 85%).

Tax: $7,774

Shifting $40,000 to a Roth IRA:

• $20,000 IRA income,
• $40,000 Tax-free Roth IRA income,
• $40,000 Social Security,
• Total: $100,000 ($44,000 taxable, SS taxed at 10%).

Tax: $0

Note: Roth IRA withdrawals need a 5-year establishment period; plan ahead!