For many folks that are approaching retirement age, visions of finally exiting the daily grind provide them with all of the strength they need to keep on plugging away until they reach the promised land.
Unfortunately, many retirees will find that their leisure days are still filled with stress, and one of the big reasons for that has to do with the good old tax man.
While there are ways to position and plan things so that your stream of retirement income is impacted as little as possible, some folks are simply going to get walloped just because of where they live.
And the details on what older residents in a number of states have to deal with in their golden years is now coming to light.
From USA Today:
When you think of double taxation, you might think of dividends. After all, they’re paid to you out of the funds that remain after a company has been taxed on its earnings — and then they typically become taxable income for you.
You might also be subject to another kind of double taxation, though — taxation of your Social Security benefits.
Social Security benefits paid to you are not necessarily taxable, but they can be subject to federal tax if they exceed a certain level. On top of that, a bunch of states tax that income, too. Here’s a look at federal taxation of benefits, along with the states that do and don’t tax Social Security.
For some retirees, SS benefits amount to all that they have on the income front.
Folks in more than a dozen states are faced with dealing with the fact that the states that they live in are going to grab a piece of the money they’ve worked their entire lives for.
An easy way to see which 37 states don’t tax Social Security benefits is to look at a much shorter list — the 13 states that do: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont, West Virginia.
Ok, so folks in these states can just up and move away to one of the 37 states that don’t hammer them on taxes, right?
While that’s a perfect world scenario for those that can afford it, not every retiree is fortunate enough to be in that situation.
Hopefully, additional attention that’s drawn to the pilfering of our nation’s most vulnerable folks will lead to some much-needed changes on the tax front.
Source: USA Today