The youngest baby boomers are approaching the age of eligibility for Social Security, while the oldest have been receiving benefits for several years. For most, those monthly payouts will be an increasingly important source of financial well-being, but two recent surveys highlight potentially costly knowledge gaps about the taxation of Social Security benefits.

More than half of adults surveyed by the Nationwide Retirement Institute incorrectly agreed with this statement: "Social Security benefits are tax free." Similarly, more than half of adults nearing retirement age surveyed by MassMutual incorrectly agreed with this statement: "Social Security retirement benefits are subject to income tax just like withdrawals from a traditional IRA account."

Here's what baby boomers need to know about taxes on Social Security benefits.

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Source Fool.com