Today TaxMama® hears from Clifford in the TaxQuips Forum, with an excellent question. “I was told in an investment class that dividend income and social security income could be “blended ” to reduce taxes. We were told that up to $70,700 dollars could be sheltered from taxes. When we asked how this could be done, they said to speak to our tax accountant. Mine doesn’t seem to know anything about this, and he worked for the IRS as an auditor for many years.”
Hi Clifford,
As it happens, when you are married filing jointly, you are in the 15% tax bracket
until your taxable income reaches $70,700. In that tax bracket, qualified dividends are tax-free.
Suppose you have $70,700 worth of qualified dividend income. All your dividends would be tax-free.
As h2os points out, since you also have Social Security income, up to 80% of
your SS income will be taxable. That will raise your adjusted gross income (AGI).
However, if you have enough itemized deductions (like mortgage interest, medical expense and charitable contributions) to offset your SS income, you could, conceivably, pay no income tax whatsoever.
And remember, you can find answers to all kinds of questions about tax-free living and other tax and business issues, free. Where? Where else? At www.TaxMama.com.
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