This tax surprise could shake up your retirement year

Social Security benefits can go a long way in retirement, especially if your savings fall short. But there’s one sneaky expense that can take a bite out of your monthly checks: taxes.

Even when you retire, it’s hard to avoid taxes. Your Social Security benefits can be subject to both state and federal income taxes, and if you’re not prepared for them, they can throw a wrench into your retirement plans.

Exactly how much tax will affect your benefits depends on your situation and not everyone will be subject to them. Here’s what you can expect.

Preparation for state taxes

Whether you owe state income tax on your benefits depends on where you live, but the good news is that 38 states don’t tax Social Security at all. So there is a good chance that you are already ready.

The 12 states that have tax benefits include Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont and West Virginia.

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