One of the most popular questions we get from Social Security applicants and new beneficiaries is whether Social Security income is taxable. The simplest answer is yes, Social Security is taxable at the federal level and even in some states.
This usually comes as a surprise to many new Social Security beneficiaries.
That is because, after working their entire lives and having Social Security payroll taxes withheld from their paychecks, many workers feel like they’ve earned their Social Security benefits and are not sure why they have to pay taxes on them.
In this post, we will explain why Social Security benefits are taxed and how to figure out if your benefits will be subject to federal taxes.
This is part of our Social Security Questions and Answers Series.
This Post Will Cover:
- When Is Social Security Income Taxable?
- Taxable social security benefits calculator
- What Does This Mean for my Tax Returns?
- Are All Kinds of Social Security Income Taxable?
- Are Social Security Benefits Taxed After Age 65 or 70?
- Which states tax Social Security benefits?
When Is Social Security Income Taxable?
How much of your Social Security is taxed depends on how much income you have from other sources in addition to your benefits.
If you have other sources of retirement income, such as a 401(k), wages from a part-time job, royalties or rental income, then you should expect to pay income taxes on your Social Security benefits.
However, if your only source of income is your Social Security benefits, then you probably won’t pay taxes on your Social Security Benefits.
Taxable Social Security Benefits Calculator
The quick way to see if you will pay taxes on your Social Social Security income is to take one-half of your Social Security benefits and add that amount to all your other income, including tax-exempt interest. This number is known as your combined income as shown below.
If your combined income is above a certain limit you will need to pay at least some tax.
Below are the limits set by the IRS based on if you file taxes as an Individual, Jointly or Married by file Separate.
You will pay tax on only 85 percent of your Social Security benefits, If you:
- file a federal tax return as an “individual” and your combined income* is
- between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
- more than $34,000, up to 85 percent of your benefits may be taxable.
- file a joint return, and you and your spouse have a combined income* that is
- between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits.
- more than $44,000, up to 85 percent of your benefits may be taxable.
- are married and file a separate tax return, you probably will pay taxes on your benefits.
What Does This Mean for my Tax Returns?
If you file tax returns as an “Individual” and you have a combined income of $25,000 to $34,000, you must pay income taxes on up to 50% of their Social Security benefits.
If your combined income was more than $34,000, you will pay taxes on up to 85% of your Social Security benefits.
However, if you file taxes as a married couple (filing jointly), you will pay taxes on up to 50% of your Social Security income if you have a combined income of $32,000 to $44,000.
If you have a combined income of more than $44,000, you will pay taxes on up to 85% of your Social Security benefits.
Each January, you will receive a Social Security Benefit Statement (Form SSA-1099) showing the amount of benefits you received in the previous year.
You can use this Benefit Statement when you complete your federal income tax return to find out if your benefits are subject to tax.
If you do have to pay taxes on your Social Security benefits, you can make quarterly estimated tax payments to the IRS or choose to have federal taxes withheld from your benefits.
Are All Kinds of Social Security Income Taxable?
All social security benefits are taxable in the same way, whether they’re retirement, survivors, or disability benefits.
However, Supplemental Security Income, or SSI, is a non-taxable needs-based federal benefit.
Are Social Security Benefits Taxed After Age 65 or 70?
Whether you pay taxes on your social security benefits depends entirely on your circumstances.
Social Security Income requirements are based on the nature and amount of your income, not your age.
Therefore, it is possible to still pay federal and state taxes on your benefits at age 65 and above if your combined income exceeds the IRS thresholds.
Which states tax Social Security benefits?
As mentioned, up to 85% of your Social Security benefits can be taxed by the federal government.
In addition, if you live in select states, your benefits are subject to state taxes.
13 states tax Social Security benefits. Here is the complete list of the 50 states. The states that tax Social Security benefits are shown with an “x” to the right.
|No, Social Security Benefits are NOT Taxed||Yes, Social Security Benefits ARE TAXED|
|District of Columbia||x|
Is Social Security Income Taxable Summary
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