Saying that social security is not taxable is inaccurate information and should not be posted as some might take it as fact. There are times when SS is not taxable, such as in Tpochay039;s case, as I assume he has gotten tax advice from a professional on that, but there are times when SS is taxable. The same applies to pension income. Bill's explanation of grossing up any non-taxable income is correct. If you take out a loan and use pre-tax income to qualify, the thought process is that if you have non-taxable income, your income would not be reduced by paying taxes, so therefor you should gross up any non-taxable income.