Income taxes are often high enough during your working years, but some people will have to pay taxes during their retirement—on their Social Security income. Even though they paid into the system for years, the Internal Revenue Service (IRS) still wants a portion when they start receiving their benefits. As many as 56 percent of people on Social Security pay taxes on their benefits.
Like all other federal taxes, these taxes are based on your income. When you retire, you may have multiple sources of income that include pensions, retirement accounts such as IRAs or 401(k)s, and more. When added together, your income could easily surpass the income levels permitted.
