IRS reminds taxpayers their Social Security benefits may be taxable
With the arrival of a new tax season, the IRS has recently issued reminder guidance for taxpayers who receive Social Security benefits. Social Security benefits include survivor benefits, monthly retirement, and disability benefits. Supplemental security income payments are not taxable. It’s important to know that if you receive survivor benefits, monthly retirement, or disability benefits, you may have to pay federal income tax on a portion of those benefits. Your income and filing status will determine what portion of the benefits are taxable.
How Do I Determine if My Social Security Benefits are Taxable if I am Single?
To determine if your benefits are taxable, take 50% of the Social Security money you collected during the year and add it to your other income. Your other income can include pensions, wages, interest, dividends and capital gains.If that total comes to more than $25,000, then part of your Social Security benefits may be taxable.
How Do I Determine if My Social Security Benefits are Taxable if I am Married Filing Jointly?
If you are married filing jointly, you should take half of the Social Security benefits you received, plus half of your spouse’s Social Security benefits received, and add that to all your combined income. If that total is more than $32,000, then part of your Social Security may be taxable.
How Much of My Social Security Benefits are Taxable?
50% of your benefits may be taxable if you are:
- Filing single, head of household or qualifying widow or widower with $25,000 to $34,000 income.
- Married filing separately and lived apart from their spouse for all of 2020 with $25,000 to $34,000 income.
- Married filing jointly with $32,000 to $44,000 income.
Up to 85% of your benefits may be taxable if you are:
- Filing single, head of household or qualifying widow or widower with more than $34,000 income.
- Married filing jointly with more than $44,000 income.
- Married filing separately and lived apart from your spouse for all of 2021 with more than $34,000 income.
- Married filing separately and lived with your spouse at any time during 2021.
Where Can I Find More Information About Taxes and My Social Security Benefits?
The best way to learn more about filing your taxes accurately and efficiently, while keeping more of your income and benefits, is to set up a free consultation with a PRIME Corporate Services advisor. Our experienced CPAs specialize in knowing all the details of the tax code and helping you keep every penny you can. You can also learn more about Social Security income and taxes at the IRS website.