It is wishful thinking that Social Security benefits should be paid tax free. Beginning in 1984, a portion of Social Security benefits have been subject to federal income taxes. Unfortunately, there are no signs this will change any time soon. In an article on Fox Business titled, “Ways to Maximize Your Social Security Payout”, some suggestions are provided to minimize taxes on your Social Security benefits.
According to the article, the best response to these taxes is tax diversification, meaning that some of your money is taxable, some is tax deferred and some is tax free. A tax professional can help you with this. Tax diversification can be a huge benefit when looking at retirement and trying to minimize taxes on your Social Security income.