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I’m a teacher. Will Social Security be taxed when I retire?

By Karin Price Mueller | for

Q. I intend to retire from a New Jersey public school in 2025. I will be 60 years old by then with 30 years of service. I am trying to plan for how my pension will be taxed, and also what affect my pension will have on Social Security. I am married and I have been told that if my annual joint income is over $44,000, up to 85% of my Social Security can be taxed. Does my pension negate my Social Security?

— Still working

A. Here’s what happens to the taxation of your Social Security.

When you’re calculating taxes, you must include in income a portion of your Social Security benefits depending on your income, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.

He said you start by adding up your total income including tax-exempt interest. To this, you must add one-half of your Social Security benefit. You then compare this sum to what’s called the “base amount.”

“The `base amount’ for a single person is $25,000 and for a married couple filing jointly it is $32,000,” Kiely said. “If the sum calculated above is less than the base amount, then none of your Social Security benefits are taxable. If the sum is more than the base amount, then a portion of your benefits are taxable.”

If it’s more than $25,000 for singles or $32,000 for those married filing jointly, but equal to or less than $34,000 for singles or $44,000 for marrieds, then 50% of your Social Security benefit is taxable, Kiely said. If the sum is more than $34,000 for singles or $44,000 for marrieds, then 85% of your Social Security benefit is taxable, he said.

“You are concerned about the effect your pension would have on your Social Security benefits,” he said. “The calculation of the base amount includes all your income, including salaries and wages, interest, dividends, capital gains, etc.”

Also note that New Jersey does not tax Social Security benefits, and keep in mind you could have changes to your Social Security benefits if you continue to work while collecting.

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Karin Price Mueller writes the Bamboozled column for NJ Advance Media and is the founder of Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for’s weekly e-newsletter.


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