When Social Security recipients make investments, they must keep in mind the potential that income generated by the investments will cause the otherwise nontaxable Social Security benefits to be taxable. This is particularly true when acquiring investments that throw off tax-exempt income. Even though the income generated by these investments is itself exempt from federal tax, this income may be sufficient to cause the Social Security recipient to be taxed on a portion of Social Security benefits. If your Adjusted Gross Income, as modified previously is approaching the applicable base amount, try to minimize your income for the remainder of the year.