At 73 and Still Working, Can You Avoid Taxes on Social Security?
A 73-year-old full-time worker worries about an unexpected tax bill on Social Security benefits. Here's what retirees in this situation need to know.
A 73-year-old worker who describes earning more per week than at any prior point in their career is raising a question that affects millions of older Americans: is it possible to avoid paying federal income tax on Social Security benefits while still holding down a full-time job?
The concern is legitimate. Social Security benefits become partially taxable once a recipient's "combined income" — a figure that adds adjusted gross income, nontaxable interest, and half of Social Security benefits — crosses certain IRS thresholds. For individuals, up to 50% of benefits may be taxed above one threshold, and up to 85% above a higher one. A full-time salary at 73 almost certainly pushes most earners well past both levels, meaning a significant portion of their Social Security check could be subject to federal tax.
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The challenge is that, unlike wages, there is no simple opt-out. However, financial planners often point to several legal strategies that can reduce the tax exposure. Contributing to a traditional 401(k) or similar pre-tax retirement plan through an employer can lower adjusted gross income, potentially pulling combined income closer to a more favorable threshold. Timing decisions around other income sources, such as delaying withdrawals from taxable accounts, can also help manage the annual calculation.
What makes this situation distinctive is the worker's age. At 73, required minimum distributions from tax-deferred retirement accounts are already mandatory under IRS rules, adding another income layer on top of wages and Social Security. That stacking effect makes proactive tax planning especially important, and many advisers recommend running annual projections to avoid a surprise balance due at filing time.
For retirees navigating this intersection of earned income, Social Security, and retirement account rules, personalized advice from a tax professional familiar with retirement income is often the most reliable safeguard against an unexpected bill. Continue reading at MarketWatch.com
