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Saving for retirement is a crucial part of preparing for your financial future — but that doesn’t mean you shouldn’t plan for Social Security benefits. You can calculate what your Social Security income will be to help provide an estimate of your benefits and what other savings you will need to lead the lifestyle you want in retirement. While you may have heard about a time when these payouts were tax-free, that is no longer the case. In short, Social Security benefits are taxable. But in reality, it is not that simple — taxability depends on marital status, total income and location. If you have some additional retirement income, besides Social Security, coming from a salary, pension, IRA or 401(k), you will likely be over the income limits and can expect that up to 85% of your Social Security benefits will be taxable.

Income Limits

The portion of your benefits you are taxed on depends upon your income. The Internal Revenue Service sets limits for calculating tax liability every year. In 2015, you will pay income taxes on up to 50% of your benefits if you are filing as an individual with combined income between $25,000 and $34,000. If you have more than $34,000 in combined income, you could be subject to taxes on up to 85% of your benefits. For couples, the amounts are $32,000 and $44,000 for up to 50% and about $44,000 for up to 85%. In this case, “combined income” means the total of your adjusted gross income, the nontaxable interest and half of your Social Security benefits. If Social Security benefits are your only source of income and your total is below $25,000, your benefits will not be taxed at all — but you may not have the comfortable retirement you imagined.

Federal & State Taxes

If you will have to pay taxes on your benefits, up to 85% every dollar of income you make over the limit will be subject to federal income tax. This can get complicated to predict, so the IRS offers a worksheet and e-file software to help you calculate your Social Security tax liability. It’s a good idea to check with your local tax pro or an accountant about state and local taxes because the rules vary by location. Some states offer exemptions and credits based on age or income and at least some Social Security is tax-exempt in most states, but there is usually a range.

Simplifying the Process

You can make the tax burden on your Social Security benefits simpler by paying these costs gradually throughout the year instead of all at once. You can either ask the Social Security Administration to withhold taxes from your benefit check by submitting a W-4V or pay quarterly estimates. If you are very concerned about tax burden in retirement, it’s a good idea to start saving early and generously with a Roth IRA, as this account uses after-tax dollars. You will never have to take required minimum distributions and you will not have to pay taxes on payments down the road because you already have.

Retirement can be tricky, so it’s important to stay on top of your finances and look for ways to improve your Social Security benefits. Check regularly to ensure you are saving enough for retirement in other ways like a 401(k) or IRA to supplement the money you can expect from Social Security. While paying taxes may not be enjoyable, this is an indication that you have saved sufficiently and will not have to live solely on these Social Security payments.

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