Being retired doesn’t mean the government is done taking taxes. You may know that the federal government can tax your social security benefits if you earn over a certain amount. But did you know some states may also want a cut of that money? Thankfully, not all states are trying to take some of people’s social security money. So you may ask: does Illinois want a cut of your social security check?
Social security benefits include your monthly retirement, survivor and disability benefits. Thankfully Illinois does NOT tax social security benefits. Retiring in Illinois means that almost all your retirement income is tax-exempt, including social security benefits, pension income and income from retirement saving accounts, including 401(k)s.
Here are some states that want a cut of your social security check:
How do these states tax people’s social security checks? There are 3 main ways they do this:
Many states, including Illinois, do not place a tax on their resident’s social security benefits. This is one of many great reasons to retire in Illinois. But what if you’re planning on moving to a state that does tax your benefits?
There are steps you can take to help avoid paying taxes on your social security benefits. Establishing a trust may be a way to help you avoid income taxes on a monthly payout. Or investing in a Roth IRA may be a better choice for you.
An estate plan is used for more than distributing your assets after you pass away. It can also include a trust, a will, power of attorney and a healthcare directive.
You have options concerning your income, and an estate planning lawyer can help you understand and decide if you need to reorganize your estate plan.
Do you have questions about protecting yourself against over-taxation? Our experienced estate planning attorneys can advise you on the best options to protect your assets. To talk to an estate planning attorney, contact the Estate & Probate Legal Group at 630-864-5835.
AREAS WE SERVE: Cook, DuPage, Kane, Lake and Will counties
