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What Triggers A Tax On Social Security Benefits

What Triggers A Tax On Social Security Benefits?

Article By : Patrick Mansfield | U.S. Gov Connect
Tax on social security

Do Retirees Have to Pay Taxes on Social Security Income?

Social Security income benefits offer income for U.S. workers who have paid into the Social Security program for a minimum of 10 years and are at least 62 years old. Social Security Administration recommends waiting until full retirement age to request Social Security income benefits. 

Many U.S. seniors who receive Social Security income before full retirement don't know they must pay federal income taxes on annual benefits received. According to Social Security, about 33 percent of Americans receiving Social Security income benefits pay federal taxes.

Taxable Social Security Income Benefits

In some cases, Social Security income benefits are taxable. If you have other income from dividends, wages, interest income, or self-employment in addition to Social Security income, you must report these on your income taxes. 

Social Security benefits may include disability, survivor, or monthly retirement income. Supplemental Security Income (SSI) is not taxable. Add the total amount of income and benefits for the tax year to determine any income tax liability.

Social Security Income and Your Income Taxes

To determine if your benefits are taxable, compare your filing status/base amount with one-half of your Social Security income benefits. No taxpayer must pay more than 85 percent of his/her Social Security benefits according to IRS rules. If you, the taxpayer:

1. File an individual federal tax return; your combined total income falls between USD 25,000 to USD 34,000; you may pay taxes on up to half (50 percent) of your Social Security income benefits.

2. Receive greater than USD 34,000 in Social Security income benefits, as much as 85 percent of your Social Security income benefits may be considered taxable.

3. File a joint federal return and you/your spouse report combined total income between USD 32,000 and USD 44,000; you may pay up to 50 percent income taxes on these benefits.

4. Receive Social Security income benefits greater than USD 44,000, as much as 85 percent of your benefits may be considered taxable.

5. File an individual tax return (although you’re married); you’re likely to pay income taxes on your Social Security benefits if you lived with a spouse during any part of that tax year.

File a joint return with your spouse, you/your spouse must report combined incomes as well as Social Security benefits when calculating the portion of your Social Security benefits’ taxable portion. If your spouse did not receive Social Security benefits during the tax year, his/her income must be added to yours to determine the taxable portion of your income.

Each January, every Social Security income recipient’s Benefits Statement (Form SSA-1099) reports the amount of Social Security income benefits received in the prior year. Use SSA 1099 to determine what portion if any of your benefits may be subject to taxes
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