Social Security benefits are earned by paying taxes throughout your entire working life. As a result, you may assume that when you start claiming them, you’ll get to keep every dollar and won’t owe any taxes on the money.
The assumption that your benefits are tax free may seem even more logical given that the government is paying out this retirement money. Why, you might wonder, does it then turn around to take some of it back? But while it may seem like Social Security retirement income should not be taxed, the fact is that it very well could be.
In fact, there are two situations in which you could end up seeing your checks shrink because you owe taxes on the benefits.