Every week, Allworth Financial’s Amy Wagner and Steve Sprovach answer your questions. If you, a friend, or someone in your family has a money issue or problem, feel free to send those questions to yourmoney@enquirer.com.

B.V. in Milford: I saw that I’ll get more in my Social Security check next year. But will I have to pay taxes on it?

Answer: Potentially. It depends on what Social Security calls your "combined income." But we’ll address that in a bit. First, let’s talk about that cost of living adjustment.

As you mention, Social Security beneficiaries will get an 8.7% boost to their monthly payments in 2023, the largest increase in 40 years. According to the Social Security Administration, this means the average recipient will get about $145 more in their check each month. But this large increase is obviously due to higher inflation. So when all is said and done, we just want to point out that it’s basically a wash – yes you’re getting more, but you’re also spending more these days.

Meanwhile, while your benefit is inflation adjusted, the thresholds for determining if you have to pay taxes on it are not. This means that, over the decades, more and more recipients are having to pay taxes on their benefits. In fact, according to the Center for Retirement Research at Boston College, when the thresholds were introduced in 1983, just 8% of families had to pay taxes on their benefits. In 2021, as benefits and incomes have increased while threshold levels have remained static, that number has grown to 56%.

So, with that said, earning more from Social Security could mean you’ll have either have to start paying taxes on your benefit or pay more if you’re already doing so.

Here’s how to know: Your combined income is your adjusted gross income + non-taxable interest + half your Social Security benefit. If your combined income is between $25,000 to $34,000, you’ll have to pay taxes on up to 50% of your benefit. If your combined income is more than $34,000, up to 85% of your benefit may be taxed. For those who file a joint return, you may have to pay taxes on up to 50% of your benefit if your combined income is between $32,000 and $44,000 and up to 85% if more than $44,000.

The Allworth Advice is if you have other types of retirement income in addition to your Social Security benefit, this is one of those cases when working with a fiduciary financial advisor can be beneficial. He or she can help you determine if adjusting your withdrawal strategy from those other accounts might be able to reduce your combined income, thereby reducing any tax bite.

C.S. in Clermont County: I’m 63, claiming Social Security ($1,000 a month), and have legal custody of my 5-year-old granddaughter. Can she get any of my Social Security?

Answer: Actually, yes – as long as certain criteria are met.

The Social Security Administration says it will pay dependent survivor benefits to a grandchild when a grandparent retires, becomes disabled, or passes away, as long as:

• The grandchild’s biological parents are deceased or disabled, or the grandparent has legally adopted the grandchild.

• The biological parents are not making any regular financial contributions to the child.

• The grandchild started living with the grandparent before age 18.

• And, to quote the Social Security website, the grandchild must have “received at least one half of his or her support from the grandparent for the year before the month the grandparent became entitled to retirement or disability insurance benefits, or died.”

Two notes: If a grandparent is already receiving benefits when they start caring for a grandchild, they have to legally adopt the child. Step-grandchildren can also qualify for benefits using the same set of rules.

The Allworth Advice is that, given your unique situation, we highly recommend consulting with the Social Security Administration (they’ll be able to go into more detail with you). Visit ssa.gov or call 1-800-772-1213.

Responses are for informational purposes only and individuals should consider whether any general recommendation in these responses are suitable for their particular circumstances based on investment objectives, financial situation and needs. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing, including a tax advisor and/or attorney. Retirement planning services offered through Allworth Financial a SEC Registered Investment Advisor. Securities offered through AW Securities, a Registered Broker/Dealer, member FINRA/SIPC. Visit allworthfinancial.com or call (513) 469-7500

This article originally appeared on Cincinnati Enquirer: Allworth Advice: Will I have to pay taxes on my Social Security?